I cannot imagine mass tokenization of equites and other securities moving forward without a legislative rethink of TEFRA. Am I wrong? Please share your thoughts on the effective ban on bearer instruments inherent in TEFRA.
In this case, the securities Project Open are proposing don't function as bearer instruments because the Transfer Agent is maintaining a white list. I've run this down before and it is difficult, though there is definitely room for a whitelisting-as-a-service provider to streamline access, which could mimic permissionlessness while maintaining regulatory compliance. The truth is, projects want to whitelist any asset before distributing yield for OFAC purposes anyway. You can arguably let it trade freely and only KYC/whitelist at touch points, though that is marginally higher risk than controlling flow of token end to end. A truly permissionless securities world would take a lot of changes, you're right.
Great piece!
I cannot imagine mass tokenization of equites and other securities moving forward without a legislative rethink of TEFRA. Am I wrong? Please share your thoughts on the effective ban on bearer instruments inherent in TEFRA.
In this case, the securities Project Open are proposing don't function as bearer instruments because the Transfer Agent is maintaining a white list. I've run this down before and it is difficult, though there is definitely room for a whitelisting-as-a-service provider to streamline access, which could mimic permissionlessness while maintaining regulatory compliance. The truth is, projects want to whitelist any asset before distributing yield for OFAC purposes anyway. You can arguably let it trade freely and only KYC/whitelist at touch points, though that is marginally higher risk than controlling flow of token end to end. A truly permissionless securities world would take a lot of changes, you're right.