Category: KoreChain

As online investing continues to experience explosive growth—rising by an annual rate of 40% since the enactment of the JOBS Act in 2015—the landscape of private capital markets has expanded considerably. In the United States alone, there are over 233 million potential investors, each of whom faces a complex web of regulatory requirements and logistical challenges. Among these, investor fatigue stands out as a significant issue, as individuals are required to navigate multiple platforms, re-enter personal data for each investment, and manage diverse portfolios across various sites. Enter KoreID: a transformative solution that streamlines the online investing process, enhancing security, efficiency, and compliance.

Understanding Investor Fatigue

Investor fatigue emerges primarily from the cumbersome processes required to engage with private investments. Each time investors wish to participate in a new offering, they must undergo the mandatory regulatory steps of KYC (Know Your Customer) and suitability assessments, filling out extensive forms and providing sensitive information anew. This not only slows down the investment process but also makes it harder for investors to track and manage their diverse investment portfolios across different platforms.

The Revolutionary Solution: KoreID

KoreID, developed by KoreChain, addresses these challenges head-on by providing a unified, secure digital identity for investors. This “passport” for online investing does three pivotal things:

• Enhanced Security and Identity Verification

1. 1. • Upon making an investment through a FINRA Broker-Dealer or a Registered Funding Platform, investors are issued a KoreID. This ID is then added to the KoreChain, the first blockchain platform to receive SEC qualification for the JOBS Act.
      • The KoreID not only verifies the identity of the investor but also records which regulated participant performed the verification and the sources used for validation.

• Simplified Access and Reduced Redundancy

1. • With KoreID, investors no longer need to fill out repetitive forms every time they want to invest. When they see the KoreID logo, they can simply use their ID to securely log in, and all their pertinent information is automatically populated. What once took minutes now takes seconds.

 

• Decentralized Investment Tracking

1. • KoreID enables investors to track all their investments in private companies through a single interface.
   • Wherever KoreID is accepted, investors can log in to view their entire investment portfolio, streamlining management and oversight.

Benefits for All Stakeholders

Investors enjoy a significantly reduced administrative burden, allowing them to focus more on finding the right opportunities without the dread of paperwork and data re-entry. This ease of use encourages continued investment activities, reducing dropout rates due to process fatigue.

FINRA Broker-Dealers and other regulated participants benefit from faster onboarding times, as the investor’s identity and background checks are already completed and recorded in the KoreID system. This ensures that all suitability and compliance requirements are seamlessly met, speeding up the transaction process and reducing the risk of regulatory violations.

Private Companies looking to raise capital find a more attractive and fertile environment for growth. With KoreID, companies can tap into a pool of verified and ready investors, which can lead to quicker funding rounds and potentially higher investment volumes.

A Paradigm Shift in Online Capital Raising

KoreID represents a paradigm shift akin to how tech giants have simplified user experiences and enhanced security. Just as many online services allow users to create accounts or log in using their Google or social media credentials, KoreID provides a regulatory-compliant method that enhances investor protection and simplifies the investment process in the private capital markets.

The Synergy of JOBS Act and KoreID

The synergy between the JOBS Act and KoreID creates a more dynamic and accessible market for private companies and investors alike. By leveraging KoreID, companies can ensure compliance with regulations such as RegCF, RegD, and RegA+, while also offering an appealing, user-friendly interface for both new and seasoned investors. This integration not only promotes wider participation in the private markets but also strengthens the overall ecosystem through enhanced security and streamlined processes.

In conclusion, KoreID by KoreChain is not just a tool but a transformational force in the private capital markets, breaking down barriers for investors and companies alike. It ensures that the burgeoning field of online investing remains vibrant, secure, and accessible, empowering more people to participate in investment opportunities previously beyond reach. For investors tired of the traditional complexities of investing in private markets, KoreID offers a refreshing passport to a world of possibilities, ensuring their journey is as seamless as it is successful

The Importance of Trust in Financial Transactions

Trust is the foundation of modern financial transactions. Without it, the intricate spider web and rabbit warren of financial processes that form the global financial system would collapse. Every financial contract, whether it is a legal contract or a social contract would be uncertain and suspect. The type of deep and universal trust is hard to build and easy to break. The financial world, with its high stakes and complex dealings, has seen its fair share of trust-shattering scandals and thefts.

Trust is lost when there is unchecked risk-taking, outright deceit, or complicated and opaque financial instruments. The 2008 financial crisis, Ponzi schemes (topped by Bernie Madoff’s scandal), and more recently the SBF fiasco don’t exactly inspire trust. These events are stark reminders of what happens when trust is violated in financial transactions. Bad as the financial losses are, the worst effect is the pervasive sense of betrayal among investors, consumers, and even regulators. Some financial losses may be recouped, but loss of trust can last a lifetime.

Building a Chain of Trust with Blockchain

But what if there was a way to incorporate trust into the very foundation of financial transactions? That would make them transparent, secure, and immutable. Moreover, that would provide the foundation for creating a Chain of Trust. Imagine a scenario where every transaction in a business process is not only connected to the ones before and after it but is also recorded in a way that cannot be altered or disputed. This is not fantasy or sci-fi. It is possible with a correctly engineered permissioned blockchain.

At a very fundamental level, blockchain is a distributed ledger that records transactions immutably after forming consensus among all the appropriate parties. A transaction recorded on the chain is trusted, provided the participants have been verified and vetted. Moreover, the transaction must be compliant with all applicable regulations. Finally, the transaction must conform to contract law. These requirements lead to a new paradigm in the private financial markets: the Chain of Trust. Not only are transactions on the chain technically linked, but they can also be proven to be compatible with regulation.

Unveiling the Power of Permissioned Blockchains

All of the above presumes that the blockchain architecture does in fact support such compliant transactions. Not all blockchains are created equal. In the context of financial transactions, where privacy and regulatory compliance are paramount, permissioned blockchains emerge as the right vehicle to implement this Chain of Trust. Unlike their permissionless counterparts, where anyone can join and participate in the network, permissioned blockchains restrict access to trusted entities only. This setup provides a safe and controlled environment where transactions are recorded and accessed by authorized and mostly regulated participants.

A permissioned blockchain serves as a digital ledger that only pre-approved members can access, ensuring that each participant is known and accountable. This is crucial for investors, broker-dealers, companies raising money, and regulators, who need assurance that their transactions are secure, compliant, and verifiable. By leveraging this technology, we can create a financial ecosystem where trust is not just expected but embedded in the system itself.

Building Momentum for Change

The value proposition of a rightly architected permissioned blockchain and the Chain of Trust it creates is not just in its security features. It’s also about efficiency and speed. Traditional financial transactions, especially those crossing borders, can be slow and fraught with red tape. With blockchain, these transactions can be streamlined, reducing the need for much of the manual intermediation, and cutting down on manual follow up and reconciliation.

Of course, no system is without its challenges. Implementing a permissioned blockchain has the challenge of creating a sufficient base of applications that work seemlessly with each other. Think of these as reference solutions that others can adopt and on which they can build and innovate. This does not require a significant overhaul of existing systems, since the goal is to completely comply with regulation. It also doesn’t require interoperability. If there is no other game in town, interoperability is moot. However, an open-ended architecture and the willingness to work with all the participants in private capital markets goes a long way in creating momentum.

So, to our investors, broker-dealers, companies looking to raise funds, and the diligent regulators keeping watch: the future of financial transactions is not a distant future or a sci-fi fantasy. It’s here now. It creates a future where trust is not a luxury but a given, thanks to the transformative power of permissioned blockchains and the Chain of Trust they enable. The road ahead may be long and winding, but the destination – a more trustworthy and efficient financial system – is clear.