Step 7-A: Complete KYB for SPV

Conditional

Complete KYB (Know Your Business) verification for the Special Purpose Vehicle (SPV) if an alternative issuing country is selected.

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Definition of SPV (Special Purpose Vehicle)

An SPV is a legally separate entity created specifically to isolate financial and legal risks associated with a particular project or business activity. In tokenization, an SPV is often used to:

• Issue tokens on behalf of the primary business entity.

• Ensure regulatory compliance in the selected jurisdiction.

• Limit liability and protect the main business operations from risks tied to token issuance.

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How It Works

• SPV Formation. The issuer establishes an SPV in the selected issuance country.

• KYB Verification. The SPV undergoes KYB verification to ensure it complies with regulatory requirements for the jurisdiction.

• Integration. The SPV information is embedded in the smart contract as part of the token’s metadata, alongside the issuance company.

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Why This Step is Important

• Regulatory Compliance. Establishes a legally recognized entity for token issuance, ensuring alignment with the jurisdiction’s laws.

• Risk Isolation. Shields the parent company from liabilities associated with token issuance.

• Transparency. Embedding the SPV information in the token’s metadata provides clear, immutable information about the issuing entity.

• Investor Confidence. A well-structured SPV reassures investors that the issuance is professionally managed and compliant.

• Flexibility. Enables token issuance in jurisdictions different from the parent company’s registration country.

This step ensures that alternative issuance structures are managed professionally and transparently, paving the way for a compliant and secure tokenization process.

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