As of December 17th 2018, Tokeny officially released a new, open source security token standard: Token for Regulated Exchanges (T-REX). The standard integrates a decentralized validation system to focus on compliance for the life-cycle of security tokens.
How Tokeny’s T-REX Security Token Standard is Unique
Tokeny, a tokenization platform which focuses on compliance, has officially released the open source T-REX (Token for Regulated Exchanges) security token standard. It was designed to allow for the initial issuance and secondary market trading of security tokens in a compliant manner with a specific focus on trusted third-party KYC and AML services.
T-REX consists of three primary components: an identity management system, a set of validation certificates, and a transfer manager.
In developing the standard, the team behind Tokeny wanted to remain transparent and contribute to the original vision behind blockchain technology. Their motivation was put forth by Tokeny CEO Luc Falempin:
“Blockchain technology was created with the vision of having a decentralized source of truth. By creating our set of standards and sharing them publicly we are staying true to this vision.”
In fact, Falempin went on to describe some key features which distinguish T-REX from the many other security token standards:
“We are very excited to announce the open source T-REX standard for compliant security tokens. The T-REX is the first and only set of smart contracts for tokenized securities allowing the transfer of ownership, via a decentralized validator system.”
Tokeny’s T-REX Security Token Standard Explained
In recent months, security tokens have experienced legitimate implementation. Ownership claims regarding equity, investment funds, REITs, real estate, and fine art have all been tokenized on the blockchain. OpenFinance Network has activated the first US-regulated security token exchange to full functionality. Some have predicted the new industry will surpass the entire cryptocurrency market cap in 2019.
The reasoning is straightforward. Such assets existed prior to distributed ledger technology, but are susceptible to significant benefits when automated on-chain. The new technology eliminates middlemen through the automation offered by programmable smart contracts. The result includes faster transactions at a reduced operational cost.
Security tokens also feature added compliance when compared to ICOs. The SEC has suggested virtually all ICOs constitute securities, resulting in the need for ICOs to abide by existing securities laws.
T-REX integrates compliance by verifying investors’ on-chain identities through trusted third party services including KYC and AML screenings. Yet investors can also maintain full control of their identity contracts, which can be used for additional services requiring verification. For example, exchange eligibility can be determined through Tokeny’s decentralized validator system. Issuers can ensure that their tokens comply to all necessary laws and regulations through compliance embedded in the process of purchasing and transferring the token itself.
Such features are certainly likely to contribute to the continued growth of the security token industry.
What do you think of the T-REX security token standard? Will its open source nature result in the necessary upgrades as the industry evolves? Let us know what you think in the comments below.
Image courtesy of Tokeny.