How to Improve Transparency and Public Trust in Crypto Markets

These legislative efforts are novel in using blockchain technology’s noteworthy public transparency and auditability functionality. Blockchains track debits and credits to accounts on a ledger, just like an ordinary accounting system, but in a real-time, transparent, and immutable fashion. The existence of any asset that resides on a public blockchain, whether a tokenized security or a digital commodity, is verifiable by customers and regulators. This is not the case for off-chain transactions, which don’t commit digital asset transactions to the appropriate blockchain. Instead, records of off-chain transactions are stored in the trading platform’s internal systems and not recorded on the blockchain. As a result, customers rely on the internal recordkeeping of unregistered trading platforms to track their record of ownership.

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