HomeNewsQuorum Authorization, Cryptocurrency things you should know

Quorum Authorization, Cryptocurrency things you should know


Last Updated on 08/08/2019 by TDH Publishing (A)

Cryptocurrencies and blockchains going mainstream for enterprise technology have been proved evident for gaining ultimate peak both in the traditional banking system and the financial sector. As regulated institutions rapidly seek to foray into the wonderful world of digital assets, security tokens are now the trend in emerging fintech technologies; Google trends data indicates that public interest in the topic of security tokens has doubled over the past 5 years.

The issue? Transactions from regulated institutions must adhere to compliance requirements, and it’s a complicated process involving multiple checks and balances. In other words: Cryptocurrency and regulations don’t mix well, at least, not without some much-needed modifications.

Quorum authorizations not only offer added security to blockchain transactions, when done well, they also can be combined with risk-based policies to ensure a smooth, automated compliance check process for any digital asset.

In a “quorum,” several pre-determined parties are required to provide authorization of a transaction – also known as m-of-n – before that transaction is completed.

Let’s begin with a basic quorum system, sans the risk-based layer. In a basic security token transaction, any institution must ensure the transaction follows both basic compliance regulations, e.g. anti-money laundering (AML), know your customer (KYC), and anti-fraud regulations.

To ensure that security token transactions are managed according to regulations, a well-built quorum would include at least 3 quorum teams made up of multiple participating parties: a minimum of one exchange employee (administrative division), a trustee of the account, and a quorum group comprised of a bot for AML compliance, a bot for KYC compliance, and a bot for anti-fraud regulations , in addition to a human compliance officer.

Quorum Authorization, Cryptocurrency things you should know 1

As illustrated, all compliance needs would have to be met for the transaction to be finished, along with the authorization of at least one account trustee and one exchange employee from the administrative services side of the organization.

James J
James J
James has been writing about tech since 2009 after spending 25 years in a computer research lab studying computers. He watches Netflix, especially sci-fi with his pet lie enjoying chips.
- Advertisment -

Must Read

Data Science Drives Personalized Marketing and Customer Engagement to New Heights...

Personalized marketing and customer engagement are crucial for businesses to thrive in the current digital era. Because data science makes it possible for marketers...