Settlement Approval Service for Private Compliant Share Trading
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Solution Overview
Problem
Existing systems lack an efficient and compliant platform for creating and trading digital securities representing real assets, such as real estate, while maintaining transaction privacy and compliance with securities regulations.
Innovation Solution
A transaction platform with semi-redundant ledgers that synchronize automatically, allowing for the creation and trading of digital securities, maintaining a private record of personally identifiable information and a public or private blockchain record without disclosing PII, and integrating a tokenization module, digital wallet management, and role-based access control.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a traditional centralized ledger is used to record transactions, then transaction privacy can be maintained, but system reliability and transparency are reduced
Solution Approach 1:
The patent divides the ledger into two separate semi-redundant ledgers: a public ledger that records transaction hashes and asset transfers for transparency and reliability, and a private ledger that stores personally identifiable information (PII) locally on user devices for privacy protection. This segmentation allows the system to achieve both system reliability through public verification and transaction privacy through localized PII storage, resolving the contradiction between these two requirements.
2Adaptability or versatility
If digital securities trading is enabled on existing platforms, then investment accessibility improves, but regulatory compliance and security become problematic
Solution Approach 1:
The patent introduces a transfer agent as an intermediary component that acts as a bridge between the public blockchain ledger and private user data storage. The transfer agent verifies investor accreditation status, manages capitalization tables, and ensures regulatory compliance while enabling digital securities trading. This intermediary layer allows the system to maintain investment accessibility through blockchain technology while ensuring regulatory compliance through centralized verification mechanisms.
3Productivity
If manual capitalization table management is used, then data accuracy can be maintained through review, but productivity and efficiency are reduced
Solution Approach 1:
The patent implements an automated capitalization table management system where the transfer agent automatically updates the capitalization table based on blockchain transaction data. The system self-updates investor records, tracks ownership changes, and maintains data accuracy through cryptographic verification of transactions. This automated self-service approach eliminates manual review processes while maintaining data accuracy through blockchain's inherent immutability and verification mechanisms, thereby improving productivity without sacrificing precision.
Data Source
AI summary
A system and method for determining whether to throttle or kill a sale of shares of an asset using a settlement approval service, including querying, by a settlement approval service, a transfer agent whether a buyer of shares of an asset is approved; querying, by the settlement approval service, a transfer agent whether a seller of shares of the asset is approved; based on the buyer and the seller being approved, querying, by the settlement approval service, the transfer agent as to whether the shares offered for sale are valid; and based on determining, by the settlement approval service, that the shares are valid, approving, by the settlement approval service, the sale of shares of the asset.