Polymath Crypto: Tokenizing Securities With Blockchain

Capital markets are highly regulated environments with significant responsibilities and requirements placed upon the primary parties — businesses looking for investors to raise funds. Unfortunately, standard blockchain technology is not equipped to accomplish this strategy. Polymath is one of the leading projects designed to address these limitations and bring the benefits of raising capital to the blockchain world.

The Need for Regulatory-compliant Security Tokens

The highly regulated nature of capital markets has long impeded large-scale fundraising on a blockchain. By default, blockchains are designed to have open access, and are subject to virtually no regulatory mechanism, while privacy and regulatory control are two pillars of securitized capital raising.

In 2017, the early days of crypto initial coin offerings (ICOs), many projects tried to attract investors by issuing security tokens meant to provide some assurance of ownership. They were different from the utility tokens used by these crypto platforms. Unfortunately, many of the tokens were “security” in name only, without any tangible standards or regulations. The Securities and Exchange Commission (SEC) was rightly unimpressed with the offers, and didn’t consider these tokens proper securities.

Polymath was then launched in 2018 and registered with the SEC to bring standardization and regulatory compliance into the process of tokenized capital raising.