The main goal of the Token for Regulated EXchanges (T-REX) standard is to create a set of global tools, fully based on blockchain technologies, to allow for the frictionless and compliant issuance and use of tokenized securities on a peer to peer basis or through marketplaces. These tokens are issued in full compliance with regulations and issuers requirements, as control mechanisms are embedded in the tokens themselves. The T-REX involves a “Compliance by Design” approach where it is simply impossible for an investor to buy a security without being compliant. The regulator itself can verify the compliance of the Issuer through the auditing of smart contracts that support the Security Token life cycle.
The management of compliant transactions through T-REX backed permission tokens will be based on 3 main pillars creating a decentralized Validator:
These 3 key elements allow issuers to use a decentralized Validator to control transfers and enforce compliance on the holders of the security token. The Validator includes rules for the whole offering (e.g. managing the max number of holders allowed in a specific markets, when such rule apply), and rules for each investors (e.g. KYC or issuer-defined eligibility criteria) thanks to the identity management system.