Royal Swiss Credit Union & Capital Trust
The RST 100 Standard
The RST100 Standard includes three core services on the Ethereum block chain:
1. R-Token, 2. Regulator Service 3. Service Registry
The Regulated Token (“RST 100 Token”) Standard The Regulated Token standard addresses the need for compliance on secondary transfers. It is built on ERC-20, a standard widely supported by the existing blockchain ecosystem. The R-Token Standard embeds compliance at the token level and allows for decentralized trading of private securities across any platform that supports ERC-20 tokens. This significantly increases liquidity in comparison to confining trade within a single centralized exchange (the walled-garden approach) to enforce regulatory compliance. Centralized exchanges can enforce regulatory requirements to a limited degree, including KYC, AML, and accreditation. However, unless they take a walled-garden approach, once a token leaves that exchange, the issuer may be unable to enforce core securities regulations such as restricting the number of investors, requiring a minimum number of investors, and stipulating ownership levels. This solution enforces 34 regulatory compliance at the token level, thereby meeting core securities requirements regardless of whether the trade occurs on centralized or decentralized exchanges. The RST100 Standard includes three core services on the Ethereum blockchain.ain:
RST Token and Regulatory Service RST 100
2. Regulator Service
3. Service Registry
RST 100 Token and Regulator Service RST 100 Token is a permissioned ERC-20 smart contract that can represent ownership of securities. It is compatible with all existing wallets and exchanges that support the ERC-20 token standard and it adds compliance functionality to check with an on-chain Regulator Service for trade approval. Every time a transfer is initiated (e.g. Bob wants to transfer a token to Alice), R-Token calls the Regulator Service within the transfer, runs compliance checks against sender and receiver, and if successful, the transfer proceeds normally per the ERC-20 specifications (i.e. the token is transferred from Bob to Alice). In addition, the transfer method delivers a successful “Check Status” event. If the compliance check is unsuccessful, then the transfer method returns an error code (i.e. the transfer from Bob to Alice fails) and delivers an unsuccessful “Check Status” event with a reason code. The Check Status event can be used by wallet providers to indicate the reason why the trade was not allowed.
Technical overview of legal compliance architecture Financial securities require legal compliance during token issuance and transfers. For that reason, there was a need for an architecture that allows to perform legal compliance based on investor location and enforce it on blockchain at all times. Additional goal behind “legal compliance architecture” is full automation of investor and, in later phase, any token holder onboarding. The compliance architecture includes four core services: 1. Legal platform 2. Oracle 3. RST 100 Token 4. Regulator Service Legal Platform Legal platform is responsible for managing the offering with legal compliance in regard to investor’s location. It on-boards investors, keeps track of all required and signed documents, preforms checks like KYC, AML and investors accreditation. It collects money and acts as an escrow account during the investment process.