Xen's CTO, Andrei Karpushonak gave a presentation about the applications of Security Tokens for alternative investments at Crypto Valley Singapore Couch Talk Series #11.

1. Company Name
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Security Tokens
for Alternative Investment
Andrei Karpushonak, CTO@Xen
andrei@xen.net

2. Title Text
Your Title
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Andrei Karpushonak
2006-2013 Developer Motorola (Poland)
2013-2015 BetVictor (Gibraltar)
2016-2017 Software Architect at Skilling
2017-2018 Founder of SolidBitcoin (Spain)
2018 Nov CTO@Xen

3. Title Text
Your Title
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Security Token
Digital certificate of ownership of shares or
investments.
Token is compliant with securities regulations.

4. Title Text
Your Title
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Alternative Investments
- hedge funds,
- trade finance funds,
- private equity funds,
- commodity funds,
- real estate funds

5. Strictly regulated environment
1 2 3
KYC
Every customer is known
Check ID, proof of address
AML
Tax declaration collected
Source of income recorded
Accreditation
Only sophisticated investors
Set of declarations

6. Investment flow
Registration
KYC, AML, set of
decelerations
Assess risk profile Propose strategies
Based on risk profile
Record investment
Track performanceAI based robo-advisory

7. Title Text
Why?
Transparency - issuance on Ethereum
Liquidity - tokens could be traded

8. Token
Open standard
ERC20 compatible
transfer/transferFrom method have
additional checks if receiver is on the
whitelist
ERC1400
ERC1404

9. • Whitelist based
• How: override
transfer/transferFro
m method
• Eg ERC-1594 or
ERC-1404
1 Force transfer
• If private keys
lost/stolen
• How: burn existing
tokens/reissue new
ones.
• Multisig!
• Eg ERC-1644
2
• Attach documents
to a token
• Eg ERC-1643
3
ERC20 tokens with additions
Trade restriction Document management

10. Challenges
Multiple standards
• No leading
standard for
security token on
Ethereum
• In essence, ERC20
token with transfer
constraint (could be
traded only within
accepted set of
customers)
1 Scalability - WIP
• At the moment
Ethereum can
process about 10
transactions per
second
• WIP: Plasma,
Plasma Ignis (with
zkSnarks),
Sharding
2 Regulations - WIP
• Only a few
countries regulate
security tokens
• Regulations are
country specific
3

11. Ideal scenario: trading
Investor
0xeC3EB..
Resident: USA
Sophisticated: yes
KYC: till 01.01.2020
1
2 Resident: Dubai
Sophisticated: yes
KYC: till 01.12.2022
3
Resident: Singapore
Sophisticated: yes
KYC: till 01.05.2022
Investor
0xaB2A2..
Investor
0xbC5C5..

12. Possible next steps for the ecosystem
Programmability
Example: query public address, receive
info: resident, country, KYC type, KYC
validity -> compose-ability.
Now: digital certificate on the ledger
Standards
Standard API for compliance
(KYC/AML/accreditation, reporting to
regulator)
Now: multiple standards
1
2
Interoperability
Example: integrate security token X
with the exchange with the complexity
of adding ERC20 token.
Now: not compatible security tokens
Privacy
Example: selective disclosure by the
owner, by providing a viewing key to
the regulator
Now: zero knowledge proofs (zk-
SNARKS) coming on Ethereum
3
4

13. Title Text
https://www.facebook.com/xentechnologies/
https://twitter.com/xentechasia
Thank You