A Regulatory Compliance Protocol for Asset Interoperability Between Traditional and Decentralized Finance in Tokenized Capital Markets
This addresses regulatory compliance issues for asset tokenization in capital markets, but it is incremental as it builds on existing token standards and regulatory reports.
The paper tackles the lack of regulatory frameworks for asset interoperability between traditional and decentralized finance by proposing a Regulatory Compliance Protocol (RCP) that standardizes recommendations into five groups and 31 items, showing superiority over other ERC protocols in validation scenarios.
There have been various attempts at token standards on numerous blockchain platforms today to fundamentally change the way assets are traded in the traditional capital markets, but there is a lack of research and resolution on regulatory issues that become the common foundation for interoperability and reusable standards. Our proposal, Regulatory Compliance Protocol (RCP), is based on the regulations and reports of 15 global financial institutions and standardizes recommendations and guidelines involving the overall asset tokenization of TradFi and DeFi into five regulatory groups: Traceability, Confidentiality, Enforceability, Finality and Tokenizability, compiling them into 31 items and presenting a benchmark for technology and standards as an underlying protocol. To review the legality and effectiveness of RCP, it was validated based on three tokenization and trading scenarios, and through the RCP-based NEW-EIP, it showed superiority over other ERC protocols related to asset tokenization.