Month: January 2019

From the leading Danish business newspaper, Børsen 9^th January 2019

According to Gartner, most traditional financial companies will close by 2030. Several share this view, among others Deloitte, World Economic Forum and IBM. It is often underestimated how much change new digital technology will bring. Financial services are increasingly “weightless” and require few physical assets to establish. This makes the financial industry very vulnerable to disruption from new digital technology.

Blockchain enables major changes by creating trust and enabling transactions between unknown parties, without traditional financial intermediaries. Among the most important financial services provided by banks are transfers, savings and loans.

In 2017, transfers of $250 trillion were made worldwide. Banks earned over $200 billion on this. Blockchain and stablecoins (with a stable value) will make it possible to carry out these transfers faster and cheaper.

Savings are possible with blockchain wallet which are becoming increasingly easy to use. Several companies now also offer non-zero interest rates on a crypto savings. Anyone can create a personal wallet without authorization from a bank and without fees.

Lending can be carried out directly between the borrower and the lender on blockchain, without intermediaries and with very low fees. The borrower gets access to good lending opportunities on a global level. Transactions can be validated and both borrowers and lenders are identified and credit rated.

Blockchain will remove some of the banks’ earnings opportunities – but will also create other opportunities. Blockchain can be used to optimize internal operations in banks, between banks, their business partners and central banks. Blockchain can be used to optimize transfers and eliminate links in the chain between banks, such as CSDs. Blockchain can be used to collect details of customer transactions and be a central source of information to enable more effective decisions on e.g., credit checks. Smart contracts can be used to ensure a higher degree of process automation and generally help to increase the level of transparency.

The banks’ settlement process for international transfers lasts two to three days. An international bank transfer today passes through several actors, from correspondent banks to central securities depositories. The two account balances must be reconciled across the global financial system, composed of merchants, funds, asset managers, etc. This process can be optimized in many ways with the blockchain.

The representation of securities on the blockchain can become a major business opportunity for the finance industry. Many try to establish technical and legal infrastructure for this market both inside and outside the established financial infrastructure. And there are lots of examples of emerging successes:

• An American company has issued shares on blockchain. These equity tokens can be traded globally by investors who have previously been approved. Trading will take place immediately and the liquidity of the share is expected to increase significantly. The digital share can be programmed with smart contracts to ensure compliance with regulations and ownership agreements.
• A British company, in collaboration with London Stock Exchange, has developed a method for representing shares on blockchain.
• The Thai state is working to represent corporate bonds on blockchain. Bond trading can then take place immediately instead of over several days. Multiple levels of financial intermediaries can be removed which will significantly reduce transaction fees.
• A Chinese bank has issued $1.3 billion of mortgage bonds on the blockchain. The purpose is to provide participants in the mortgage ecosystem with instant information, as well as faster and cheaper transactions.
• JP Morgan will “tokenize” gold bars. The gold bars are labeled electronically and can then be traced from the mine to the buyer. JP Morgan expects raw materials on blockchain to become a very large market.
• Deutsche Bundesbank and Deutsche Börse have completed a successful project with blockchain as an infrastructure for the financial market, as well as settlement of securities transactions.
• Finnish banks are working on digitization of property registers on blockchain. The banks could not agree on who was to manage a centralized solution, so one chose a decentralized model on blockchain. Five banks participate and the project covers 85% of the Finnish property loan market.

Fintech Disruption Summit in Copenhagen on February 28 2019 will also introduce delegates to the above topics. See more on http://fintechdisrupt.io

The Value Proposition of Blockchain-Based Equity Fundraising

Most industry experts agree that the future financial infrastructure will to a large degree be based on blockchain elements. This seems intuitive given that any transfer of value can be made immediately and with less reliance on middlemen than today. This is an advantage for ordinary consumers and corporates, but also an advantage for banks in their own right, to optimize international transfers, etc. Over time it will lead to more efficient systems and lower transactions fees for everyone.

Industry experts also predict that everything will be tokenized in the future. This means that anything of value will be represented on the blockchain, or rather the ownership rights to anything of value will be represented on the blockchain, be it stocks, bonds, currencies, and assets, such as works of art, real estate, ships, expensive cars, etc. We are seeing thousands of teams world-wide working on this, all in a feverish haste to become first movers in getting some of the pieces in place. Already now the first 20-30 projects have managed to tokenize some type of value and hundreds are expected to follow in 2019.

New terms have been defined such as “security tokens“, meaning tokens representing a security (stock, bond, etc.) – also termed “tokenized securities”. As ICOs are becoming less popular, they are now being replaced by STOs (security token offerings) – meaning a capital raise conducted by offering security tokens for sale as either a private or public offering. These terms are very blockchain-centric. As blockchain becomes a standard part of the financial infrastructure and nothing unusual in itself, we expect these terms to be replaced with others such as “digital securities”, “digital shares”, etc. A blockchain-based fundraise may just be termed a good old-fashioned private or public offering of shares (possibly “digital”).

This article will focus on blockchain-based capital raises and tokenized shares (digital shares) as this is the focus of our business: GoSecurity DigiShares.

Why should a company choose to conduct a private or public offering using blockchain technology rather than existing methods? And why should an investor buy token-based shares rather than good old-fashioned shares on a stock exchange?

Below we will list the main reasons for why companies should raise capital via the blockchain:

• The entire financial infrastructure is moving in this direction, so the company will be better prepared to take advantage from this (company share tokens may be easier adopted for trading on exchanges, in banking systems, etc.)
• Almost immediate transfer of tokens from seller to buyer and almost immediate settlement. Trading is much faster with less artificial delays. This may lead to higher interest from investors and as a result higher prices. For most unlisted shares, liquidity is close to zero, and early investors may be stuck for many years waiting for an option to sell. If shares are issued on the blockchain (with less trading restrictions), these early investors will be able to sell any time they want. This will make the investment itself much more attractive to investors, leading to higher prices
• Better access to international investors. Groups of investors are being organized and pre-registered in databases across the world. These commercial databases are increasingly connected to each other and available to tap into by companies looking for investors. Many platforms (such as GoSecurity DigiShares) are being developed that enables investors to immediately invest into companies issuing shares on the blockchain. These platforms will partner with international groups of investors and investor databases, in order to offer their clients increased access to international investors. This is possible to a much higher degree than old-fashioned technologies and systems, since within the blockchain ecosystem, all players are using compatible technology that is able to interconnect, interact and exchange information about investors and opportunities. At the end of the day this means that investment opportunities will be presented to many more investors than in the present day where most capital raising platforms are limited to their domestic market and where there is no easy interchange between capital raising platforms and investor networks. This will make it significantly easier for good companies to raise capital and perhaps even at better valuations.
• Access to more efficient and modern technology. Companies issuing shares via the blockchain will join in a new global trend which will lead to technology advantages (higher efficiency, lower transaction costs, wider reach, etc.) but in itself, the use of new and better technology will boost marketing and branding of the capital raise and make possible a “technology premium”, i.e., higher valuation due the association with better and more efficient technology.
• Reverse liquidity premium. The liquidity premium is the compensation demanded by investors for investing into securities with low liquidity. It is well known that there is a significant liquidity premium required by investors investing into unlisted companies – simply because they cannot easily liquidate their position, indeed it may take many years. Liquidity premiums can be very high, sometimes several hundred percent. With blockchain-based shares that may be traded on exchanges, this premium is removed (or reduced very significantly), leading to higher valuations for companies raising capital on blockchain-based issuance platforms.
• Lower cost of raising capital. An IPO is hugely expensive, costing easily several hundreds of thousands of dollars, going into the millions. An IPO is not an option for many companies for this reason. Other options include raising capital from VCs (less than 1% succeed in this), crowdfunding (also less than 1%), and bootstrapping (98%?). The direct cost of raising venture capital is relatively low, between $2,000-10,000 in legal fees (more for later rounds). But the real cost should be measured in liquidity premium (lower valuation) resulting in more equity sold to investors and much higher dilution for founders. Another potential cost results from liquidation preferences where VCs ensure that they are paid out prior to founders on an exit. To run a successful crowdfunding campaign could easily cost $50k-100k + commission fees to the crowdfunding platform. Many pay less but these are also often unsuccessful. Equity crowdfunding is in some ways similar to blockchain-based fundraising, since equity is sold and this equity is “digitized” to some degree. However, equity crowdfunding platforms are isolated and not connected to other industry players – or potentially linked into the future financial infrastructure. So companies issuing on an equity crowdfunding platform will not enjoy the benefits of easy future trading of their shares on various exchanges, nor almost immediate trading and settlement of their shares. (Hint: some equity crowdfunding platforms may make deals with blockchain companies in order to offer their clients a “tokenization” service). So what does a capital raise with blockchain technology cost? Right now, from $30,000 up to $1M, including all elements (legal, marketing, platform costs, etc.). As these services get commoditized, it is however expected that they will decrease very significantly from 2020 and forwards. As the process is standardized, legal and platform costs will drop dramatically. As investor networks are increasingly linked into exchanges and issuance platforms, marketing costs will also drop significantly. Finally, lower costs of raising capital will make possible much smaller and lower capital raises and making a capital raise increasingly competitive compared to taking out loans.
• Tokenization of tokens. Tokens on the blockchain will represent ownership rights in a share in a company. Shares may in some cases be too expensive for some investors which will lead to a lower price for the share. However, in the world of blockchain, tokens may be tokenized – and fragmented into smaller elements. A share in a big company may cost $10,000. But if such a share is represented by a blockchain token – this token may be further fragmented and tokenized into 100 tokens, each representing 1% of the original share. Such a token will cost $100, and will suddenly open up the access to invest to many more retail investors – leading to a small but significant increase in the share price.
• Lower transaction fees. The forthcoming exchanges for trading tokenized securities have published their fee structure and it seems these will be a factor of magnitude lower than fees on existing exchanges for listed company shares. This will attract investors and will drive valuations and prices upwards.
• Process automation. A larger proportion of the processes surrounding issuance and trading with shares can be automated with blockchain technology, due to the scope and capabilities of smart contracts. For instance, processes related to investor verification (KYC), money laundering avoidance (AML) and investor accreditation verification may be increasingly automated, removing costly human elements, increasing efficiency and driving down overall costs. Company votes and distribution of dividends may in a similar fashion be simplified and at least partly automated with heavily reduced costs as a result.
• Increased design scope. First mover issuance companies, including GoSecurity DigiShares, recommend that tokenized securities emulate old-fashioned securities, i.e., precisely duplicate the properties of shares or bonds. This makes it easier for the national securities authorities to recognize and approve (or deny) the security, and it makes it easier for investors to understand the security (don’t invest in something you don’t understand!). However, in the future it becomes extremely easy for issuers to design entirely new types of securities with properties that cannot be foreseen today. The focus could be on rights allocation between company and its founders and investors. The focus could also be on adding non-security related rights, such as a discount when shopping in company stores, free tickets to sports matches, etc. In addition, the focus could be designing new types of derivatives, combining properties of shares and bonds, combining other tokenized securities and assets, etc. All in all, this will open up massive new business opportunities for issuers and investors.
• 24/7 trading. Blockchain-based trading exchanges will be open around the clock, i.e., around 4 times more than existing exchanges. This will enable trading across time zones and increased ability to trade and may be more attractive to investors than the current trading hours.
• Much more reliable and secure than existing alternatives. The blockchain itself is a trust engine with its shared, immutable and transparent ledgers. Trading history will be visible for anyone, including authorities. The risk of errors will be much reduced and the chance of discovering errors will be much increased. Investors can trade via exchanges – but they can also easily (at close to zero cost) trade directly, peer-to-peer. In the current system, if a company incorrectly updates the cap table and their shares are uncertificated, investors risk losing their shares. With a blockchain-based tokenized security, this can never happen, since the holder of the token will also by definition be the owner. (Hint: blockchain implementations will use the certificated approach).
• Compliance will be automated and built into the smart contracts of the tokenized securities. Suddenly trading across jurisdictions become possible to a much higher degree than now, since compliance will be checked and guaranteed by the token smart contract. In the old system, to avoid compliance issues, trading of unlisted shares is limited to specific platforms and never possible across platforms or peer-to-peer.
• Lower ongoing cost due to automatically maintained cap tables. These can be maintained both by using smart contracts to update them, and by periodically scanning the blockchain for unreported trades. At the same time, in the blockchain world, the cap table will be more accurate and updated than in the current regime.

Below we will list the main reasons for why investors should consider buying blockchain-based shares. Many of these are the same or overlapping as above, so they will be abbreviated where already explained:

• Increased trading opportunities and increased liquidity. This is extremely important to all investors and even more so business angels and VCs investing into startups
• Access to invest into companies or assets that are not normally available. As companies tokenize their shares in order to provide liquidity for current investors or raise capital from new ones, more and more investment opportunities become available for investors. Currently, business angels struggle to get sufficient deal flow since most startups seeking investors are not connected with them. High net worth individuals and ordinary retail investors struggle even more since few opportunities are available to them. As it becomes easier and less expensive to raise capital via the new blockchain-based ecosystem, more and more startups and established companies will choose this route – and create more opportunities for investors.
• Faster and less expensive trading. Many investors are dissatisfied with current high trading fees on existing exchanges. These are expected to be reduced with a factor of magnitude as processes are automated. Trading of unlisted shares is currently a cumbersome affair but it can be fully automated with a very low cost on the blockchain.
• Tokenized fragments of shares. As expensive shares and assets can be tokenized in smaller fragments, more investments become affordable for retail investors. It becomes easier to spread your investment portfolio across different types of assets and securities. Business angels will be able to spread their investments across more startups. VCs will be able to tokenize their funds and attract funding from more investors in lower amounts.
• Higher security and transparency. It will be visible to anyone how the cap table in a specific company is structured (though individual investors IDs will not be visible). Trades will be (almost) immediate and non-reversible. Many errors can be avoided or reduced in frequency. The investor will have a higher degree of certainty that the investment is secure.

We are aware of 3 typical perceived risks among normal non-blockchain investors but all 3 can be debunked:

• Security tokens are like crypto. It dropped 90%! The same will happen here! No – the entire security token industry tries to disassociate itself from crypto, and indeed there is very little in common. The crypto market consists of currencies such as bitcoin and ethereum, stable coins such as Tether and MakerDAO, and thousands of utility tokens created to fund more or less well-developed business models and platforms. Most of these were funded by ICOs – the issuance of a large amount of tokens with some future promised value, often depending on the future success of the platform itself. Many crypto exchanges exist that make these tokens available to speculators, driving up and down prices of tokens with no (or very limited) real assets backing the token. Stable coins may be an exception but this remains to be seen in the future. Security tokens are always backed by an existing security or asset. Investors are required by law to be fully informed about the value of the backing security or asset prior to investing into the token. Therefore, investing into a security token is (from a legal perspective) exactly the same as investing into a share, bond – or other type of security. So if you are already investing into listed or unlisted shares, you should not be afraid of investing into tokenized shares on the blockchain – it is exactly the same – only better.
• Your wallet can be hacked and you can lose your token. This is often the case for utility tokens but most issuance platforms provide functionality to freeze and reissue a tokenized share, should this situation arise. Obviously, the investor will have to provide sufficient proof prior of ownership for this function to be used. The hacker also cannot transfer the token to his own wallet, since the built-in smart contract will prevent this.
• Your token may be issued using a blockchain technology that later becomes obsolete. This is also not going to happen, since blockchains are increasingly interoperable and most issuance platforms provide functionality to freeze old tokens and reissue new ones with new functions or new standards.

It is often claimed that the advantages provided by blockchain implementations of issuance and trading systems also can be provided by existing technologies – however, this author does not see any competing technology that comes even close to matching the blockchain benefits of increased efficiency, reduced trading and settlement times, reduced transaction fees, automation of compliance, increased cross-jurisdictional trading, increased liquidity of traditional illiquid investments, increased security and reliability, etc.

The European Ecosystem

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The US Ecosystem

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The Asian Ecosystem

For suggesting more companies in the Asian region

you can reach us at: info@gosecurity.io

Security Token Offerings

Terminology

– Exchanges, Infrastructure, Issuance, Custodians and STOs

• Jump to terminology section /
• Jump to STO section

The European Ecosystem

Issuance Platforms

Blockstocks – Block Stocks provides a turnkey service in creating tokenized securities offerings for SMEs. From marketing, legal, finance and IT, all execution is provided in-house so owners can focus on what they are best at.
DigiShares– Provides a white label technical platform for STOs. DigiShares provides fully compliant and customizable workflows for KYC, AML and accreditation.
Jibrel – Jibrel is a blockchain and smart contract development company. They aim to leverage the latest innovations in cryptography, distributed ledger and smart contract technology to build the financial networks of the future.
Blockex – The BlockEx Digital Asset Exchange Platform manages the entire lifecycle of blockchain based digital assets, including origination, issuance, exchange, settlement and redemption. The DAxP includes a digital asset creation tool, exchange, clearing, settlement, registry and Brokerage Software.

Exchanges

Gibraltar Blockchain Exchange – The Blockchain Based Stock Exchange (GSX) aims to be a world-leading institutional-grade token sale platform and digital asset exchange. Built upon principles of decentralisation and community consensus.
SIX Digital Exchange – Switzerland’s stock exchange owned and managed by SIX announced on 6 July 2018 that it is building a fully integrated trading, settlement and custody infrastructure for digital assets.
BlockExMarkets – is a London-based brokerage where you can buy, sell and exchange crypto, FIAT and participate in ICOs. With a user-friendly interface that puts the customer in control and supports a variety of secondary markets and fiat-to-crypto and crypto-to-crypto instruments. The ICO marketplace features a selection of vetted ICOs available to all. Participants can purchase ICO tokens using either crypto or fiat.
DX.Exchange – DX.Exchange is the first complete crypto community that allows institutions and individuals to purchase cryptocurrencies with fiat, trade cryptocurrencies, and convert crypto back to fiat. DX.Exchange is being built on Nasdaq’s market leading matching technology.
Blocktrade – Blocktrade brings blockchain-based technologies and crypto assets to a unified and connected marketplace. It is Swiss guarded with the highest security and integrity features, performance driven, high volume and market-depth that meets stringent statutory compliance.
Archax – Archax offers a credible bridge between the blockchain world and the traditional investment space. The exchange, set to be launched later this year, is designed specifically for institutions and built using existing, proven, resilient, scalable, high-performance exchange infrastructure, hosted in top-tier datacentre space, and integrated into the existing institutional trading workflow.

Custodians

SIX Digital Exchange – Switzerland’s stock exchange owned and managed by SIX announced on 6 July 2018 that it is building a fully integrated trading, settlement and custody infrastructure for digital assets.
Ledger Vault – The solution is ideal for Asset Managers and Custodians looking for convenience and streamlined operations with zero compromise on security.
Swiss Crypto Vault – Swiss Crypto Vault AG was established in strategic partnership between Swiss Gold Safe AG and Bitcoin Suisse AG to provide the combined expertise in storage and crypto asset handling.

Infrastructure

Neufund – A platform for primary offerings of securities (Vermögensanlagen), as legally binding smart contracts on the Ethereum Blockchain “Equity Tokens”. Such tokens are technologically enhanced shares that are as easy to purchase and trade, yet give the investors and issuers legal protection similar to classical forms of VC investing. The platform has key expertise is in legal-tech and reg-tech.
Smartland – Smartlands is a worldwide Platform for tokenization of real economy assets by issuing asset-backed tokens (ABT). Use a ready, secure and proven solution developed by Smartlands. In cooperation with Stellar and other partners on Platform development.

KYC ? AML? Accreditation?
Before explaining what KYC/AML stands for, let’s try to understand why these processes exist and why they are essential for the next generation of Initial Coin Offerings (ICOs) and Security Token Offerings (STOs) to thrive.

When the public saw the gain potentials in cryptocurrencies, they flocked to it. This naturally brought an increase in exchanges, which in turn brought regulations with it. As exchanges attempted to become legitimate businesses, they encountered the regulatory rulebook, and like other legitimate businesses, they needed to play by the book. Due diligence processes were needed to achieve compliance. Know Your Customer (KYC) and Anti-Money Laundering (AML) became the standards to verify and validate investors. Although KYC and AML have been around for a much longer period in traditional finance, it has only been recognized and used for a couple of years in the crypto space. With these regulations in place, more businesses are starting to see an “environment” in which they are willing to work.

KYC is the process by which a business verifies the identity of clients. AML is the process to assess the risk of illegal intentions with a set of procedures designed to stop the practice of generating an income through illegal activities (money laundering, terrorist activities, etc.).

Accreditation is the process of certification of a special status under financial regulation laws. High-net-worth individuals or entities are able to invest upon first being approved and recognized as experienced investors. Accreditation is not normally required for a normal ICO, where utility tokens are issued. However, for STOs (Security Token Offerings), accreditation is almost always required.

An STO is the issuance of a token with security properties. In most jurisdictions worldwide, it is only allowed for accredited (aka experienced) investors to participate in security issuances. Hence the requirement for accreditation (verification of investor status) in STOs.

How do these services work?
Some of these are professional companies with many big clients and others are startups looking to compete with innovative technology. While these companies all provide basic services, they also have to be aware that identification requirements differ from one jurisdiction to the next (see below).

The basic element of KYC is Passport/ ID /Drivers licence verification through image or video recognition. The identification number given by the user is handled by the verification company and run through a database. If everything checks out, the user is granted permission to access the desired platform to make investments. While the process is handled internally by the chosen verification company, they may still offer a manual verification option. As an additional security measure, the customer can check and possibly identify suspicious investors.

AML is a term used to describe legal steps that require regulated entities to detect, report and prevent money laundering activities. Strict background checks are necessary to combat money launderers in order to stop the practice of generating an income through illegal activities (white washing of money, terrorist activities, etc.). AML requirements vary throughout the world. One of the main differences between the US and the EU has to do with data protection and who owns the data. Currently, in Europe, data ownership belongs to the individual as a human right, while in the US, it’s usually the property of the entity that possesses it.

Accreditation is an evaluation process where the investor is assessed for net worth, earnings, expertise, experience and knowledge. This classification process varies by jurisdiction, as follows:

Retail clients requesting treatment as ‘elective’ professional clients (as defined by Markets in Financial Instruments Directive [MiFID]) must satisfy at least two of the following quantitative criteria in assessing the client’s expertise, experience and knowledge:

• the client has carried out trade transactions of significant size (at least EUR 50,000), on the relevant market at an average frequency of 10 per quarter over the previous four quarters;
• the size of the client’s financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds EUR 500,000;
• the client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.

In the United States, to be considered an accredited investor, one must have a net worth of at least $1,000,000, excluding the value of one’s primary residence, or have an income of at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year. The term “accredited investor” is defined in Rule 501 of Regulation D of the U.S. Securities and Exchange Commission (SEC)

Companies who offer these services
When a company wants to outsource KYC, there are many vendors to choose from. These vendors can be divided into three groups.

The first group contains larger companies with a proven track record in the traditional financial industry. Easy integration and expert verification allows the platform to avoid malicious users. The main drawback is the prohibitive price. These services are expensive and the cost can potentially run into six figures (for thousands of investors). Usually, these companies also verify accredited investors, so no additional service providers are necessary for this purpose.

Identity.™
The leadership team of identity Trust Management AG looks back upon many years of experience in the field of creating and providing KYC solutions. We are committed to the highest standards in quality, integrity and efficiency and we are specialized in providing legally and data protection act compliant identification services of natural persons and legal entities.

IDnow
IDnow provides KYC services for the financial sector in some of the most tightly regulated markets in the world for a few years now. As one of the earliest companies to operate in this space, we’re able to train our AI powered platform with more real-world data than anyone, meaning our platform is faster and more reliable, giving our customers everything they need to onboard customers quickly and confidently.

The next group is ICO/STO specific businesses, who are specialised in the crypto space. Integration is normally easier with these since they are optimized for this specific use case. There is a bit more variation in quality between companies here as some may be relatively new businesses. Some errors may be made but the site owner can manually check, if required. Prices vary and depend on the services selected.
The leadership team of identity Trust Management AG looks back upon many years of experience in the field of creating and providing KYC solutions. We are committed to the highest standards in quality, integrity and efficiency and we are specialized in providing legally and data protection act compliant identification services of natural persons and legal entities.

Blockpass
Blockpass offers shared regulatory compliance services for humans, companies, objects and devices. As an identity system that supports verification of humans (KYC), objects (KYO) and connected devices (KYD), Blockpass will enable the development of new applications that rely on a trusted connection between multiple entities. They are also very flexible with their pricing and offer KYC+AML services from as low as 1 Euros

IdentityMind
IdentityMind supports your AML and fraud prevention needs across a range of solutions covering Know Your Customer (KYC), sanctions screening, anti-money laundering (AML) transaction monitoring, and chargeback detection. We help you ensure regulatory compliance and protect against fraud losses with our digital identities, providing the most complete picture of a customer’s risk.

The last group consists of new startups. Potential customers have to be aware that these are young businesses where errors are possible. However, prices could be significantly lower than the competition.

Clears
CLEARS provides a unique KYC certificate stored inside the blockchain. Security is guaranteed from end to end, no data is shared by CLEARS. Data is only matched and validated. Each company using CLEARS can use its own rules to remain compliant with local and international regulations. CLEARS will continue to check and certify data along the way. CLEARS Identifies every customer after the first KYC is completed.

Fractal Blockchain
Fractal Blockchain aims to build a future of self-governance and believe that innovative blockchain solutions provide the key to achieving a decentralised economy. We invest in regulatory compliance so you don’t have to. We designed and audited our user identification (KYC) and fraud prevention (AML) process, as well as data protection across jurisdictions.

KYC ? AML? Accreditation?
The alternative is doing the verification process manually. How this can be done will be explained in a follow-up article.

When a business is choosing a solution for their KYC/AML and potential accreditation needs, they should be aware that this is one of the biggest financial burdens of the project, but a necessity for success.

Please note that none of the foregoing is intended to be legal advice. It is strictly intended for general purposes, and should not be regarded as legal opinion or advice. Please consult a local attorney regarding specific facts and current circumstances.

Written by Ádám Blázsek
Published 25.10.2018
View the article on Medium here.