A Validation System for Secure Peer-to-Peer Exchange
TPL is a self-regulatory system to support formal decentralized economies while preserving users’ freedom to innovate. By implementing TPL, projects can guarantee regulatory compliance in every single exchange between participants.Read the full proposal ▸ View on Github
While blockchain technology has steadily matured over the last few years, significant challenges remain, in particular towards integration with the traditional financial system.
This process, however, might put financial innovations at risk if exclusively driven by institutions that will tend to favor the status quo. To be successful, the integration must be led from within the community, proposing clear guidelines on how to onboard institutional players.
TPL is an opt-in regulatory system that is governed by the network and enforced on-chain, allowing parties that trust one another to transact securely. It is inspired by SSL (Secure Sockets Layer), a protocol created by Netscape in 1994 and adopted by major web browsers to identify secure connections to a server via the Internet.
How it works
Individuals and entities are validated via Know Your Customer (KYC), Anti Money Laundering (AML), and investor accreditation processes, mirroring the ICANN process for domain validation that the internet industry is already familiar with.
When issuing a token, a project can demand its buyers to meet certain validation requirements, which are introduced within the token smart contract code itself. The protocol then validates that participants meet these requirements, and approves transactions automatically if they are met.
An immediate consequence is that TPL allows any project to guarantee regulatory compliance in every single exchange between participants, beyond just the initial offering.