mirror of
https://github.com/lux-apps/papers.git
synced 2026-10-30 18:15:21 +00:00
zeekay
abf99d05fc
Restructured from flat .tex/.pdf files into per-paper subdirectories. Added Antje Worring as co-author on all papers. Synced PDFs to pdfs/ for download site.
72 lines
3.0 KiB
TeX
72 lines
3.0 KiB
TeX
\section{Regulatory Framework}
|
|
|
|
\label{sec:compliance}
|
|
|
|
\subsection{Isle of Man Money Transmitter License}
|
|
|
|
Lux operates the network's custodial and gateway functions under a
|
|
\textbf{Class 8 Money Transmitter License} issued by the Isle of Man
|
|
Financial Services Authority~\cite{iomfsa,cdax}. This class of
|
|
license authorizes bureau-de-change operations, payment services,
|
|
cheque cashing, and---critically for Lux---the issuance of
|
|
electronic money backed by real-world assets (Digital Safekeeping
|
|
Receipts, or D-SKRs).
|
|
|
|
The Isle of Man jurisdiction was selected for three reasons:
|
|
|
|
\begin{enumerate}[nosep]
|
|
\item \textbf{Clear legal status for digital assets}: Manx law
|
|
treats cryptocurrency as property for transfer purposes and
|
|
money for transmitter licensing purposes, providing the
|
|
clearest regulatory basis for token issuance.
|
|
\item \textbf{EU and UK access via equivalence}: Isle of Man
|
|
financial licenses enjoy mutual recognition with significant
|
|
European and UK regulatory regimes.
|
|
\item \textbf{Sophisticated regulator}: The IOMFSA has been issuing
|
|
digital-money licenses since 2015 and has a track record of
|
|
principled, technically competent supervision.
|
|
\end{enumerate}
|
|
|
|
\subsection{Identity Chain and DID}
|
|
|
|
The Identity Chain (I-Chain) stores Decentralized Identifier (DID)
|
|
records and verifiable credentials for every regulated participant
|
|
on the network. A participant's DID contains:
|
|
|
|
\begin{itemize}[nosep]
|
|
\item A unique on-chain identifier (not derivable from the
|
|
participant's personal data).
|
|
\item Verifiable credentials issued by KYC providers, each with a
|
|
cryptographic attestation and an expiry date.
|
|
\item A revocation pointer that allows a KYC provider to revoke a
|
|
credential on-chain if the participant's status changes.
|
|
\item An accredited-investor flag (for US participants) or
|
|
equivalent jurisdictional flags.
|
|
\end{itemize}
|
|
|
|
A smart contract that requires regulated transfers (e.g., a
|
|
security token) queries the I-Chain before permitting any transfer.
|
|
If the sender or recipient's DID does not carry a valid credential
|
|
for the relevant jurisdiction, the transfer reverts.
|
|
|
|
\subsection{Automated KYC/AML}
|
|
|
|
KYC/AML checks occur at three layers:
|
|
|
|
\begin{enumerate}[nosep]
|
|
\item \textbf{Onboarding}: A new participant registers via a KYC
|
|
provider (multiple providers are supported; the network is
|
|
not beholden to any single vendor). The provider issues a
|
|
verifiable credential to the participant's DID on the
|
|
I-Chain.
|
|
\item \textbf{Transaction}: Every regulated transfer queries the
|
|
I-Chain to confirm that both parties hold valid credentials.
|
|
\item \textbf{Ongoing}: KYC providers monitor their issued
|
|
credentials for sanctions list changes, adverse media, and
|
|
other ongoing screening events. A provider can revoke a
|
|
credential at any time, immediately blocking the
|
|
corresponding participant from further regulated transfers.
|
|
\end{enumerate}
|
|
|
|
%% ============================================================
|