Settlement Approval Service for Privacy-Safe Share Validation
Find Innovative SolutionsGenerate Solutions
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 public record on a blockchain without disclosing personally identifiable information and supporting a private record with personalized data, while adhering to regulatory requirements.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a public blockchain ledger is used to record transactions, then transparency and immutability are improved, but personally identifiable information is exposed
Solution Approach 1:
The patent extracts personally identifiable information (PII) from the blockchain ledger by using hashed identifiers instead of direct personal data. The system maintains transaction transparency through the immutable ledger while removing harmful PII exposure by storing only cryptographic hashes of personal information, which cannot be reverse-engineered to reveal original data.
Solution Approach 2:
The patent introduces an intermediary layer between the personal information and the blockchain ledger. This intermediary uses cryptographic hashing functions to transform personal identifiers into irreversible hash values that are stored on-chain, while the original personal data remains stored securely off-chain in private databases, thus mediating between transparency requirements and privacy protection.
2Reliability
If manual processes are used for capitalization table updates and transaction processing, then data accuracy can be maintained through human review, but efficiency and productivity are reduced
Solution Approach 1:
The patent implements self-service automation where smart contracts on the blockchain automatically execute capitalization table updates when transactions occur. The system uses automated oracle feeds to retrieve transaction data from multiple sources, validates it against pre-set compliance rules, and updates the cap table without human intervention, thereby maintaining accuracy through automated validation while dramatically improving processing speed.
Solution Approach 2:
The patent establishes automated feedback loops where the system continuously monitors transaction data from multiple sources, validates it against compliance requirements, and automatically adjusts the capitalization table. This feedback mechanism ensures data accuracy through automated validation rules while eliminating manual review bottlenecks, thus resolving the contradiction between reliability and productivity.
3Reliability
If multiple data sources are integrated for transaction validation, then compliance and reliability are improved, but system complexity increases
Solution Approach 1:
The patent creates a universal smart contract framework that can interface with multiple different data sources (broker feeds, transfer agents, custodians) through standardized protocols. This multi-functional approach allows the same core validation logic to work across diverse data sources, improving compliance validation while managing complexity through standardization rather than requiring separate integration logic for each source.
Solution Approach 2:
The patent introduces oracle intermediaries that act as standardized interfaces between the blockchain smart contracts and external data sources. These oracles retrieve, validate, and format data from multiple sources in a uniform manner, allowing the core compliance validation logic to remain simple while handling the complexity of multi-source integration at the intermediary layer.
4Productivity
If automated smart contracts are deployed for transaction execution, then efficiency and speed are improved, but flexibility for manual intervention is reduced
Solution Approach 1:
The patent implements dynamic smart contracts that can automatically execute transactions under normal conditions but include built-in mechanisms for manual intervention when needed. The system uses governance functions and administrative keys that allow authorized participants to pause, modify, or override automated execution when exceptional circumstances arise, thus maintaining both high automated efficiency and necessary flexibility for manual control.
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.