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This paper introduces the Regulatory Compliance Protocol (RCP), a framework for achieving interoperability between traditional finance (TradFi) and decentralized finance (DeFi) asset tokenization. RCP synthesizes regulations and guidelines from 15 global financial institutions, categorizing them into five regulatory groups (Traceability, Confidentiality, Enforceability, Finality, and Tokenizability) and 31 specific items. Validation through tokenization and trading scenarios, using an RCP-based NEW-EIP, demonstrates RCP's superiority over existing ERC protocols for asset tokenization.
Bridging TradFi and DeFi asset tokenization requires more than just technology – it demands a standardized regulatory framework, and this paper delivers one.
There have been various attempts at token standards on numerous blockchain platforms today to fundamentally change the way assets are traded in the traditional capital markets, but there is a lack of research and resolution on regulatory issues that become the common foundation for interoperability and reusable standards. Our proposal, Regulatory Compliance Protocol (RCP), is based on the regulations and reports of 15 global financial institutions and standardizes recommendations and guidelines involving the overall asset tokenization of TradFi and DeFi into five regulatory groups: Traceability, Confidentiality, Enforceability, Finality and Tokenizability, compiling them into 31 items and presenting a benchmark for technology and standards as an underlying protocol. To review the legality and effectiveness of RCP, it was validated based on three tokenization and trading scenarios, and through the RCP-based NEW-EIP, it showed superiority over other ERC protocols related to asset tokenization.
