Creating a marketplace for tokenized Real-World Assets (RWAs) involves integrating business and technology components. This guide explains the steps to achieve compliance while leveraging the Verified Network—a decentralized ecosystem of regulated financial service providers.
Table of Contents
What is the Verified Network?
The Verified Network is a decentralized infrastructure that connects regulated entities to facilitate the issuance, distribution, and servicing of tokenized securities. Key participants include:
- Transfer Agents: Maintain records of securities ownership and update them during trades.
- Custodians: Secure private keys for tokenized securities and offer insurance against theft or misuse.
- Asset Managers: Manage capital, underwrite tokenized securities, and provide liquidity by enabling seamless trading.
- Brokerages: Facilitate trading of underlying assets like bonds or shares for issuers.
- Payment Institutions: Issue electronic money tokens (e.g., USD or EUR-backed tokens) for settling trades.
- Compliance Managers: Conduct Know Your Customer (KYC) checks and Anti-Money Laundering (AMLA) monitoring.
Steps to Create a RWA Marketplace
Step 1: Assemble Core Components
To create a compliant marketplace, operators need:
- Access to transfer agents, custodians, payment institutions, and compliance managers.
- Blockchain infrastructure with smart contracts for creating security tokens and liquidity pools.
- Portfolio management tools for investors.
The Verified Network provides these services via its Software Development Kit (SDK) and Subgraphs.
Step 2: Use the Verified SDK
The Verified SDK simplifies development by offering:
- Pre-deployed smart contracts on Ethereum and other blockchains.
- JavaScript interfaces for integrating blockchain functionality into web/mobile applications.
Step 3: Ensure Compliance
Compliance is critical in tokenized securities markets:
- KYC/AMLA Checks: Licensed compliance managers verify users’ identities and monitor wallets for suspicious activity.
- Wallet Whitelisting: Only wallets approved through KYC checks can hold cash tokens or security tokens.
- Developers can integrate KYC workflows using the Verified SDK’s plugins.
Step 4: Issue Security Tokens
Marketplaces can enable issuers to request security token creation:
- Issuers submit details like token name, symbol, investor type, and offering documents.
- Licensed transfer agents approve requests, leading to token minting based on the CMTA standard.
- Tokens are credited to issuers’ wallets for sale or trading through liquidity pools.
Step 5: Facilitate Token Sales
Marketplaces support two types of sales:
- Primary Issues: New securities offered to raise capital with workflows for subscriptions, allotments, and refunds.
- Secondary Issues: Existing securities traded through on-chain market or limit orders.
Trades are settled by transfer agents, ensuring regulatory compliance.
Step 6: Enable Portfolio Management
Investors need tools to manage their portfolios:
- Applications can query blockchain data using Verified subgraphs to display profits/losses, balances, and corporate actions.
- Features like voting on resolutions can be integrated for eligible investors.
By following these steps and leveraging the Verified Network’s tools, businesses can create secure, compliant marketplaces for tokenized Real-World Assets.