When it comes to tokenized securities, issuers need guardrails to ensure that only authorized investors can hold their tokens and know where to send them. To meet this need, Republic Crypto and token builder Upside have created an upgraded version of the four-year-old Ethereum smart-contract framework ERC-1404 called ERC-1404 Prime. This new foundation is designed to help issuers of security tokens comply with complex investor regulations. According to Republic Head of Tokenization Jeff Vier, ERC-1404 Prime allows for more complex transfer restriction scenarios than the original standard, and prepares tokens for a world where centralized and decentralized finance might converge. “How do we improve for today with what regulators are looking for, what the industry is looking for, and also setting ourselves up to design assets that can exist in a future state?” he said.
The enhanced version of ERC-1404 incorporates lessons learned since Tokensoft debuted the original version, and can handle automated lock-ups and dividend distributions. According to Tokensoft CEO Mason Borda, “To date, we’re the only ones that have gotten SEC-registered tokens through the SEC on a public blockchain.” Noah Thorp, CEO of Upside, added that the new design can help tokens get to the secondary market faster.