User-Issued Assets by Bitshares

Regulation-compatible cryptoasset issuance

The BitShares platform provides a feature known as "user-issued assets" to help facilitate profitable business models for certain types of services. The term refers to a type of custom token registered on the platform, which users can hold and trade within certain restrictions. The creator of such an asset publically names, describes, and distributes its tokens, and can specify customized requirements, such as an approved whitelist of accounts permitted to hold the tokens, or the associated trading and transfer fees.
BitShares allows individuals and companies to issue their own tokens for anything they can imagine. Common use cases include:

Deposit Receipts

1. Know Your Customer
2. Asset Seizing
3. Market Restriction
4. Transfer Restrictions
   Company Shares
   Event Tickets
   Rewards Points
   Individual or Corporate Debt
   Crowd Funding
   Digital Property
   Privatized SmartCoins (Stable Cryptocurrencies)
   Information/Prediction Markets
   How to Profit by Issuing an Asset
   Fee Pools
   The potential use cases for user-issued assets are innumerable, and the regulations that apply to each kind of token vary widely, and are often different in every jurisdiction. BitShares provides the tools to allow issuers to remain compliant with all applicable regulations when issuing assets.

Following are a few example use cases for user-issued assets.

Deposit Receipts
Banks are simply companies that maintain a database of customer account balances and facilitate the transfer of these assets among their depositors. Companies like Dwolla and Paypal essentially issue deposit receipts, and then offer cheaper transfers among their users than between banks. With BitShares, it is now possible to move these internal databases onto the blockchain where the deposits can be used with other smart contracts such as the internal markets, escrow, or bonds.

In talking to many different banks and exchanges, we have learned a lot about what the law requires of those who wish to issue deposit receipts.

1. Know Your Customer

First and foremost the issuer must know every single customer. BitShares supports this by enabling both whitelists and blacklists. Rather than requiring every issuer to whitelist every customer separately, an issuer may specify a set of identity verifiers that they trust to do this job. This allows issuers to benefit from the network effect of validated users without having to do any direct identity verification themselves.

When an asset enables whitelists, no account may send or receive that asset without being on an authorized whitelist. An accounts funds can be frozen by removing them from the whitelist.

1. Asset Seizing

From time to time, an issuer may be required to seize funds as a result of a court order. While this may be unappealing to cryptocurrency purists, it is an unavoidable reality of trust-based assets. An issuer can determine whether or not they wish to revoke this privilege, but it may be a requirement in some jurisdictions.

1. Market Restriction

An issuer who offers both USD and EUR deposits may need to restrict direct trading between their USD and EUR assets to avoid being subject to foreign currency exchange regulations. Some cryptocurrency exchanges allow trading between fiat and cryptocurrencies, but not between two fiat currencies. Without this feature, many exchanges would be unable to issue their assets on the BitShares blockchain.

1. Transfer Restrictions

A transfer-restricted asset allows the holders of the asset to trade it in the markets but not transfer it from person to person. Only a few cryptocurrency exchanges allow user-to-user transfer of funds outside the market, because this particular activity is often subject to a different set of money transmission regulations.

The deposit receipt example is probably one of the most important, and yet most heavily regulated, use cases of user-issued assets.

Company Shares
Corporate shares are heavily regulated by the SEC, but non. Source by Bitshares