Polymath Tests Prove Security Tokens Are DEX Compliant

Polymath, which is a security token platform, recently partnered with Loopring in an attempt to trial peer-to-peer trading of security tokens. But unlike the conventional methods used in the crypto space, it is being done on a decentralized exchange.

Successful Test Results

According to the official report, the aforementioned platform stated that the tests it performed returned with successful results. The tests, in particular, reportedly utilized smart contracts on the DEX Protocol courtesy of Loopring. Apparently, they all proved that only authorized trades of ST-20 security tokens were successful in executing. As for the unauthorized ones, it was the other way around.

The ST-20 security token, in particular, is a standard designed and created by Polymath. It is, by essence, an extension of the more generalized ERC-400 standard, which is responsible for introducing the capability of restricting transfers directly to blockchain tokens. The security token platform claimed they can only be held and/or traded if, and only if, a set of rules or criteria are met.

Polymath also provided some details pertaining to the tests it performed. Basically, the platform tried trading a digital currency called “wrapped ETH” and it was done within Cammazol. The latter simply refers to the titular ST-20 token.  The tests even had authorization for the transfers relating to the token succeeding. On the other hand, it involved an unauthorized one, which, as mentioned above, failed to transfer.

Explaining the Process

Graeme Moore, the vice president for marketing at Polymath, said in an official interview that the two companies were responsible for carrying out the tests. The goal was to mainly demonstrate that security tokens, in a compliant manner, could be traded successfully. And yes, this process is possible even on decentralized exchanges, which made the tests even more interesting.

Moore added that the firms tried to showcase that both security token issuers and decentralized exchanges are capable of maintaining compliance via standardized protocols, which were built by Polymath and others from the get-go. The executive further stated thanks to security tokens, it has become much easier for issuers to follow regulations. For him, this is a much better option to choose than the traditional paper share certificates commonly used in legacy capital markets system.

Polymath said that whenever a trade is attempted, the token automatically calls its transfer manager module. From there, it would reportedly determine whether the trade is executable or not. The transfer manager is then responsible for checking a whitelist in order to check if the buyer and the seller are authorized to trade the token.