This process also assumes some checks and balances would be rolled up into process. Under this set-up any new security tokens issued would be regulatory compliant right from their issuance. It could even create a more legitimate blockchain based market that will reach mainstream faster than following the traditional route. If this is set-up properly it could do away with the need for a regulatory body to get involved later in the process. Polymath seeks to turn that process upside down by involving government officials and attorneys at the beginning of the token creation process. That’s exactly the type of regulation that cryptocurrency markets will get if an alternative isn’t found. The regulatory agencies create laws and regulations that get pushed down to all the investors and companies involved in listing or trading, and they all have to follow these regulations or get banned from the markets, or worse, face legal actions. This is how stock, bond and commodities markets work today. Traditionally, financial markets are overseen by a central agency who provides regulations and enforcement of non-compliance. The Polymath team seeks to garner acceptance for security tokens through the use of smart contracts to apply restrictions from the ground up, rather than having them imposed after the fact with a top-down regulatory enforcement model. And there will be a 24/7 low fee trading environment.
What is Polymath?īitcoin, Ethereum and most cryptocurrencies are application or utility tokens on unregulated, decentralized networks. Let’s take a deeper look and see if Polymath really will be good for cryptocurrencies, or if there’s a fatal flaw in the plan to created a securities blockchain. Companies get easy access to capital, there’s increased transparency, no need for onerous regulations and paperwork, increased liquidity, greater visibility, and an incentive to create financial products. And they’ll do so while also providing incentives to bring new financial products to market on the blockchain, while also keeping regulators happy and at bay.Īs an additional security measure, only verified buyers will be able to purchase or trade POLY coins. It was developed to help issue securities tokens in a safe and blockchain regulated manner. Polymath is looking to be the cure to the ICO sickness. Possibly worst of all, they threaten to bring more scrutiny to cryptocurrencies from government agencies and regulators. Why You should consider issuing a security token. securities laws in one way or another, and while they might not be regulated now, if they do become regulated this could pose a definite long-term risk. Many of the current ICOs are in violation of U.S.
There are also the legal ramifications to consider. Let’s be honest, with roughly half of all the 2017 ICOs already failures, this is a pretty risky space. While early investors in new blockchain projects have the opportunity to see their investments increase by 100% or even 10,000%, they have an equal opportunity to see their investments go to $0 when the project dies, or even worse the developers simply disappear with the ICO funds. ICOs have become both incredibly attractive and incredibly risky.
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