Please describe your proposed solution.
Summary/TLDR:
- We will reate an open source Tokenization smart contract on Cardano.
- We will approach BaFin for an audit of this smart contract.
More details:
Our proposed solution focuses on conducting a comprehensive BaFin audit for a Cardano smart contract, specifically designed to comply with the German Electronic Securities Act (eWpG) and broader EU regulations. This approach is driven by the recognition of a critical gap in the legal and operational framework of blockchain technology, particularly in the European context.
> Enabling this means you can use this BaFin audited Cardano smart contract for eWpG compliant tokenization of assets in the EU, based on the passporting rule.
Perception of the Problem:
We perceive the problem as twofold: first, the lack of legal recognition for blockchain-based digital assets, particularly in the EU; and second, the absence of standardized compliance protocols for blockchain platforms like Cardano. This gap hinders the potential for broader adoption and integration of blockchain technology into the mainstream financial ecosystem.
Approach and Reasoning:
Our approach is to align Cardano's smart contract capabilities with established financial regulations. By mirroring the compliance standards already achieved by Ethereum and Polygon, we aim to elevate Cardano’s standing within the EU market. This audit isn't merely a regulatory hurdle but a strategic move to enhance trust, security, and functionality.
Engagement and Demonstration:
The project will engage legal, financial, and blockchain experts to ensure thorough compliance and audit processes. We plan to demonstrate impact through clear metrics, such as legal recognition, increased adoption rates, and enhanced market confidence in Cardano.
Uniqueness and Benefits:
Our solution is unique in its focus on harmonizing advanced blockchain technology with specific legal frameworks. This alignment benefits developers, investors, and users within the Cardano ecosystem by providing a more secure, transparent, and legally compliant environment. It's a critical step in advancing the blockchain sector's credibility and utility, particularly in the EU’s regulated financial markets.
Importance to Cardano:
This project is pivotal for Cardano's growth and integration into the global financial system. It addresses legal and compliance barriers, paving the way for broader adoption and innovation. By ensuring compliance with eWpG and EU standards, we open new opportunities for Cardano in the European market and beyond, positioning it as a leader in legally compliant blockchain solutions.
Benefit: Cardano smart contracts are more efficient and reliable from technical standpoint than its equivalent on ETH & Polygon, which will be officially recognized by BaFin currently going through an audit. Even if the BaFin audit is not yet completed, the superior technology of Cardano technology will result in significant benefits for the smart contract users.