COMPLIANCE, IDENTITY AND REGULATION

On-Chain Compliance

The embedding of regulatory requirements—KYC/AML checks, transfer restrictions, investor eligibility rules, and reporting obligations—directly into token logic or smart contracts, enabling automated enforcement at the point of transaction.

EXAMPLE

Securitize embeds on-chain compliance into tokenized fund transfers so that accredited investor checks run automatically before any secondary market transaction settles.

Relevant Roles and Functions

On-chain Role
Chief Compliance Officer
Function
Blockchain Compliance Frameworks
Decentralized Finance Risk Exposure
Digital Asset Licensing and Oversight
Regulatory Policy for Digital Assets
Regulatory Reporting for Crypto Activity

Related Terms

Smart Contract

Self-executing code deployed on a blockchain that automatically enforces and carries out the terms of an agreement when predefined conditions are met—without requiring an intermediary to oversee performance.

Example

A smart contract can automatically release collateral when a loan is repaid, eliminating manual processing and reducing operational risk.

Permissioned Blockchain

A blockchain network where participation—reading, writing, or validating—is restricted to pre-approved entities. Permissioned chains offer privacy and regulatory control suited to institutional and consortium use cases.

Example

JPM Coin operates on a permissioned blockchain, ensuring only verified institutional counterparties can initiate or receive transfers.

Regulatory Reporting

The obligation to submit transaction data, positions, and risk exposures to regulators. On-chain activity can streamline reporting by making ledger data directly auditable, though it also raises new questions about jurisdiction and data access.

Example

An immutable on-chain trade record could replace post-trade reporting to DTCC, giving the SEC real-time visibility into institutional digital asset positions.