Prominent security token issuance and lifecycle management platform Securitize announced in a press release CoinReport received from Clarity, Securitize’s communications agency, the launch of the Digital Securities (DS) Protocol, an open source, third-party apps-supporting protocol developed on Ethereum. The DS Protocol is created to resolve compliance and liquidity matters confronting issued security tokens for the complete token lifecycle as they are traded on private and public exchanges.
DS Services will offer the following to all stakeholders:
- Communications Service, which will alert token holders regarding important events through the token itself.
- Registry Service, which is an on-chain register that makes KYC information available during several interactions in the digital security lifecycle.
- Trust Service, which will allow for authorization of diverse constituencies (i.e. exchanges) and DS Apps to be utilized for a current issuance.
- Compliance Service, which will enforce particular compliance rules applicable to a DS Token about trades and ownership.
The DS Protocol applications (DS Apps) that handle the pertinent events related to security token ownership and management, including the economic rights of the security token, will specifically address present and future compliance and liquidity matters for security tokens.
The DS Apps are created to remove current and future compliance, management and liquidity matters at the security token level associated with trading security tokens on exchanges and privately. The beneficiaries of the DS Protocol will be exchanges, coin holders (investors) and security token issuers. According to the press release, the DS Protocol has been developed to further an ecosystem in which developers are able to assist in increasing the value that security tokens offer to stakeholders.
The DS architecture, a set of interfaces that will allow for third parties (developers) to enhance and extend the DS ecosystem, will govern DS service elements, with the entire structure allowing for these interactions between DS Apps and DS Tokens:
- DS Apps: Apps that deliver the functionality necessary during each stage in the digital security lifecycle – from issuance or swap to cap-table generation, governance events, or mandatory pay-outs.
- DS Tokens: A rudimentary representation of digital proprietorship on the blockchain which will be executed by an ERC20 extension. It will enhance fundamental token mechanisms with particular behaviors needed for the new ecosystem (such as controlling transfers within a regulated environment) while preserving compatibility with current ERC20 token infrastructure (exchanges, custodian, wallets, etc.).
Securitize will offer a reference application of this protocol on its own DS issuance platform, which will also be affirmed by the real-world issuance of tokens for Securitize’s customer base.
Securitize CEO Carlos Domingo said in the release we received, “Our DS Protocol enables the developing security token industry to open up in the way we’ve always imagined and expected it to. Security tokens are now a reality, and this new DS Protocol facilitates dynamic and open participation across all actors in the ecosystem.
“DS is open source, and we hope developers beyond just Securitize will utilize the platform to provide valuable tools for investors to manage every element of a full digital security lifecycle on the Ethereum blockchain.”
Image via Clarity