Restricting token transfers¶

Introduction¶

Unlike cryptocurrencies, security tokens have restrictions on transfers.

The real world identity of a receiver must be resolved before a transfer to maintain up-to-date shareholder registry information
For limited private companies, restricted shares are often subject to company’s approval before they can be given to a new owner
Bearer shares, or shares without known owner on a shareholder ledger, are illegal in the most jurisdictions

For all of these problems the solution is to “whitelist” token receivers, or shareholders, beforehand.

A centralised service maintains real world identity information of blockchain addresses offchain
This centralised service reports to blockchain who are allowed to receive new transfers

Security tokens in the restricted mode need addresses to be whitelisted. Addreses are whitelisted using a KYC smart contract.

To deploy the KYC smart contract:

sto --config=myconfig.ini kyc-deploy

If the smart contract is already deployed then it wont be re-deployed.

Adresses can only whitelisted by the owner of the smart contract:

sto --config=myconfig.ini kyc-manage --whitelist-address='0x2B5AD5c4795c026514f8317c7a215E218DcCD6cF'

The command will also broadcast the transaction to the ethereum network. There is no need to run command tx-broadcast.