Regulatory Compliance DLT refers to the strategic application of Distributed Ledger Technology (DLT) to meet, enforce, and streamline adherence to financial regulations and reporting requirements. This approach leverages the inherent characteristics of DLT, such as immutability and transparency, to create more efficient and verifiable compliance frameworks. Its purpose is to reduce operational burdens and enhance regulatory oversight in the financial sector.
Mechanism
The mechanism involves establishing shared, permissioned ledgers where regulated entities and supervisory bodies can access verifiable transaction records and smart contract-enforced business logic. Immutable audit trails are automatically generated for all activities, providing an unalterable record for regulatory scrutiny. Automated reporting can be programmed into smart contracts, enabling real-time or near real-time submission of required data.
Methodology
The strategic methodology focuses on building DLT-based systems that incorporate regulatory rules directly into their design, enabling “regulation by code.” It facilitates enhanced transparency for regulators through direct access to verified data, reducing the need for manual data aggregation and reconciliation. This approach aims to create more robust, cost-effective, and auditable compliance systems, particularly relevant for emerging digital asset markets.
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