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Automatically merged updates to draft EIP(s) 1450 

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@ -12,17 +12,17 @@ created: 2018-09-25
# LDGRToken - A compatible security token for issuing and trading SEC-compliant securities
## Simple Summary
`LDGRToken` is an `ERC-20` compatible token that complies with the [new Securities Act Regulations: Regulation Crowdfunding, Regulation D, and Regulation A](https://www.sec.gov/smallbusiness/exemptofferings).
`LDGRToken` is an `ERC-20` compatible token that enables issuing tokens representing securities that are required to comply with one or more of the following [Securities Act Regulations: Regulation Crowdfunding, Regulation D, and Regulation A](https://www.sec.gov/smallbusiness/exemptofferings).
## Abstract
`LDGRToken` facilitates the recording of ownership and transfer of securities sold under the [new Securities Act Regulations](https://www.sec.gov/smallbusiness/exemptofferings). The issuance and trading of securities is subject to the Securities Exchange Commission (SEC) and specific U.S. state blue sky laws and regulations.
`LDGRToken` facilitates the recording of ownership and transfer of securities sold in compliance with the [Securities Act Regulations CF, D and A](https://www.sec.gov/smallbusiness/exemptofferings). The issuance and trading of securities is subject to the Securities Exchange Commission (SEC) and specific U.S. state blue sky laws and regulations.
`LDGRToken` manages securities ownership during issuance and trading. The Issuer is the only role that should create a `LDGRToken` and assign the RTA. The RTA is the only role that is allowed to execute `LDGRToken`’s `mint`, `burnFrom`, and `transferFrom` functions. No role is allowed to execute `LDGRToken`’s `transfer` function.
## Motivation
With the advent of the [JOBS Act](https://www.sec.gov/spotlight/jobs-act.shtml) in 2012 and the launch of Regulation Crowdfunding and the amendments to Regulation A and Regulation D in 2016, Investors have the right to purchase securities issued by companies (Issuers) and to sell those securities to other Investors under the conditions specified in a purchase agreement and subject to SEC and State regulations.
With the advent of the [JOBS Act](https://www.sec.gov/spotlight/jobs-act.shtml) in 2012 and the launch of Regulation Crowdfunding and the amendments to Regulation A and Regulation D in 2016, there has been an expansion in the exemptions available to Issuers and Investors to sell and purchase securities that have not been "registered" with the SEC under the Securities Act of 1933.
There are currently no token standards that conform to SEC regulations. ERC-20 tokens do not support the regulated roles of Funding Portal, Broker Dealer, RTA, and Investor and do not support the [Bank Secrecy Act/USA Patriot Act KYC and AML requirements](https://www.occ.treas.gov/topics/compliance-bsa/bsa/index-bsa.html). Other improvements (notably [EIP-1404 (Simple Restricted Token Standard)](https://github.com/ethereum/EIPs/issues/1404) have tried to tackle KYC and AML regulatory requirement. This approach is novel because the RTA is solely responsible for performing KYC and AML and should be solely responsible for `transferFrom`, `mint`, and `burnFrom`.
There are currently no token standards that expressly facilitate conformity to securities law and related regulations. ERC-20 tokens do not support the regulated roles of Funding Portal, Broker Dealer, RTA, and Investor and do not support the [Bank Secrecy Act/USA Patriot Act KYC and AML requirements](https://www.occ.treas.gov/topics/compliance-bsa/bsa/index-bsa.html). Other improvements (notably [EIP-1404 (Simple Restricted Token Standard)](https://github.com/ethereum/EIPs/issues/1404) have tried to tackle KYC and AML regulatory requirement. This approach is novel because the RTA is solely responsible for performing KYC and AML and should be solely responsible for `transferFrom`, `mint`, and `burnFrom`.
## Specification
`LDGRToken` extends `ERC-20`.
@ -69,8 +69,7 @@ contract ERC20 {
```
/**
* LDGRToken is an ERC-20 compatible token that complies with the new Securities Act
* Regulations.
* LDGRToken is an ERC-20 compatible token that facilitates compliance with one or more of Securities Act Regulations CF, D and A.
*
* Implementations of the LDGRToken standard must define the following optional ERC-20
* fields:
@ -302,7 +301,7 @@ Investors may “lose” their credentials for a number of reasons: they simply
If an Investor (or, say, the Investor’s heir) loses their credentials, the Investor must go through a notarized process to notify the RTA of the situation and supply a new Investor address. From there, the RTA can `mint` the “lost” securities to the new Investor address and `burnFrom` the old Investor address (because the RTA knows all Investors’ addresses).
## Rationale
The are currently no token standards that conform to SEC regulations. The closest token is [ERC-884 (Delaware General Corporations Law (DGCL) compatible share token)](https://github.com/ethereum/EIPs/blob/master/EIPS/eip-884.md) which states that SEC requirements are out of scope. [EIP-1404 (Simple Restricted Token Standard)](https://github.com/ethereum/EIPs/issues/1404) does not go far enough to address SEC requirements around re-issuing securities to Investors.
The are currently no token standards that faciliate compliance with SEC regulations. The closest token is [ERC-884 (Delaware General Corporations Law (DGCL) compatible share token)](https://github.com/ethereum/EIPs/blob/master/EIPS/eip-884.md) which states that SEC requirements are out of scope. [EIP-1404 (Simple Restricted Token Standard)](https://github.com/ethereum/EIPs/issues/1404) does not go far enough to address SEC requirements around re-issuing securities to Investors.
## Backwards Compatibility
`LDGRToken` maintains compatibility with ERC-20 tokens with the following stipulations: