A security token protocol “KoreToken” that keeps everyone compliant with securities laws in the US and Canada
New York, NY (June 27, 2018) – KoreConX, the first all-in-one business platform for small to medium-sized enterprises (SMEs), released its KoreToken Protocol for security tokens — helping ensure compliance throughout the lifecycle of the security.
Security agencies, including the SEC in the USA and CSA in Canada, have made it clear that when companies are conducting a token offering where the token has the ability to trade and gain in value, it must be issued as a security token.
KoreToken is a Security Token Protocol that is designed to keep investors not only safe from theft, forking and transactional errors, but also keep them from violating the complex disclosure and reporting requirements in multiple jurisdictions. All of these capabilities are designed to identify and reduce the risk profile of tokenized securities.
“The marketplace needs a security token protocol that fully understands the life cycle of a security token and corporate actions,” said Oscar Jofre, co-founder and CEO of KoreConX. “What the market has seen so far does not meet those requirements and issuers (companies) will once again run afoul with regulators. The implications for those involved could have severe consequences.”
The KoreToken security protocol is built on the foundational principle of safeguarding securities and protecting all the participants from both financial issues and regulatory issues. The protocol also provides the specifications for technical as well as legal closure for validity, consensus, and finality. The protocol is extensible with the use of APIs to collaborate with validated and registered partners.
“A token is a digital asset, where I give you my money and you go off and make a venture, and in return for giving you my money I say ‘you can get a return’ that is a security and we regulate that,” Jay Clayton, SEC Chairman said. “We regulate the offering of that security and regulate the trading of that security.”
A security token protocol is not just about ID verification, AML or investor verification. And, It’s not just about compliance during the trading process. These are necessary but not sufficient. The issuer (or their agent, such as a broker dealer or transfer agent) needs to account for jurisdiction, exemption, reporting, security token holder rights, custodianship, trading, reporting and corporate actions. This the only way a company can issue and manage a security token without falling out with the regulators.
“Most of the rebranding of utility tokens to security tokens address securities regulation only superficially as a superficially to appease the regulators to the regulators,” said Dr. Kiran Garimella, chief scientist and chief technology officer of KoreConX. “The fundamental issues of safety, security, and risk must be addressed. Moreover, these are not one-time problems. They exist throughout the life of the security. The technical infrastructure to make all this happen is non-trivial and calls for very serious, enterprise-class engineering.”
Security tokens that use the KoreToken protocol, including the KoreConX’s own KoreToken, run on the KoreChain, which is a permissioned blockchain that is built on Hyperledger Fabric and hosted on IBM servers with the highest level of security. KoreChain’s built in AI technology will enable machine-learning and data-analytic services for transactions. Finally, KoreChain will use AI to augment its native governance, risk, and compliance capabilities.
KoreConX is the first secure, all-in-one platform for private companies to manage their capital market activity and stakeholder communications. Removing the burden of fragmented systems and inefficient tools across multiple vendors, KoreConX offers a single environment to connect companies, investors and broker/dealers. Leveraged for investor relations and fundraising, private companies can share and manage corporate records and investments including portfolio management, capitalization table management, virtual minute book, security registers, transfer agent services and virtual deal rooms for raising capital. Register your company for FREE www.koreconx.com.