Transfer Standards
Last Updated on October 28, 2022
IMPORTANT – PLEASE CAREFULLY READ AND UNDERSTAND THESE TRANSFER STANDARDS BEFORE ACCESSING, USING, OR SUBSCRIBING OR TRANSFERRING ANY BOOK-ENTRY SECURITIES ISSUED BY BLOCKTRANS SYNDICATE. THESE TERMS FORM AN ESSENTIAL BASIS OF OUR AGREEMENT. PLEASE PRINT AND RETAIN A COPY OF THIS AGREEMENT FOR YOUR RECORDS.



BlockTrans Syndicate ("Block Transfer," “we,” “our,” “us”) acts as a securities transfer agent for various issuers ("issuers"). We maintain ownership records through assets issued on the Stellar network by issuer*blocktransfer.io or GDRM3MK6KMHSYIT4E2AG2S2LWTDBJNYXE4H72C7YTTRWOWX5ZBECFWO7 (“Issuer Assets”). We use Issuer Assets for regulatory reporting of official investors of record through our patented, proprietary, blockchain-integrated system which was approved by the Securities and Exchange Commission under Section 17 of the Securities Exchange Act of 1934 pursuant filing OMB #3235-0084 on July 20, 2021.

We offer Issuer Assets; including all information, tools, and services available for Issuer Assets to you, the user; conditional upon your acceptance of all transfer standards stated here. By accessing, using, subscribing, or placing an order for Issuer Assets, you agree to the standards set forth herein. If you do not agree to these transfer standards in their entirety, you are not authorized to interact with Issuer Assets in any manner or form whatsoever.

You cannot trade Issuer Assets if you are an underwriter or dealer, including disposition transactions through the Stellar Decentralized Exchange ("SDEX"). In any account, you may not tender restricted securities for any other assets, including under the same exchange conditions.

Whenever submitting SDEX private sales, you represent in writing that you are not aware of any material, non-public information about the company whose shares you're trading.

Regulations of digital assets, blockchain technologies, and digital asset platforms are currently developing and likely to rapidly evolve, varies
significantly among international, federal, state, and local jurisdictions and is subject to significant uncertainty. Various legislative and executive bodies in the United States and in other countries are currently considering, or may in the future consider, laws, regulations, guidance, or other actions, which may severely impact us, and thus securityholders. Failure by us to comply with any laws, rules, or regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences to Issuer Assets.

Block Transfer maintains the official record of share ownership in various securities via a proprietary blockchain-integrated system that utilizes features of traditional book-entry form and the Stellar network’s blockchain. The use of blockchain technology is relatively new and still evolving for securities registrars. Similar to traditional fund recordkeeping systems, all shareholder records in the blockchain integrated system are under our full and complete control. At any time and without prior notice, we may freeze your account through the Stellar network to comply with federal rulings, execute securities splits, investigate suspicious activity, or any other such time as we see fit.

A blockchain is an open, distributed ledger that records transactions between two parties in a verifiable and permanent way using cryptography. Transactions on the blockchain are verified and authenticated by computers on the network (referred to as “nodes” or “validators”) that receive, propagate, verify, and execute transactions. The process of authenticating a transaction before it is recorded ensures that only valid and authorized transactions are permanently recorded on the blockchain in collections of transactions called “blocks.” Blockchain networks are based upon software source code that establishes and governs their respective cryptographic systems for verifying transactions. The recording of Issuer Assets on the blockchain will not fundamentally affect the valuations of issuer securities. Just because issuers use us does not suggest that issuers will invest in any cryptocurrencies (referred to as, among other things, virtual currencies), and any other such interpretation is construed and unruly.

Upon the creation of an account, shareholders will create a blockchain wallet. Each investor will be assigned a unique Stellar network blockchain address for their wallet, and they will be able to track the balance of Issuer Assets in their wallet on a public “block explorer” tool capable of displaying activity on the Stellar network. Users of the Stellar network must pay transaction fees (in the form of “Stellar Lumens,” the native digital asset for the operation of Stellar) to the Stellar network in order to validate a transaction. Such transaction fees are intended to protect the Stellar network from frivolous or malicious computational tasks. Investors will not be required to purchase any Stellar Lumens. Upon registration, we provide all accounts with sufficient Stellar Lumens for ordinary interaction with Issuer Assets. Should more funds be needed, they will be provided on a case-by-case basis at our sole discretion.

Delays in transaction processing have occurred on the Stellar network. Such a delay may occur on account of, among other things, the inability of nodes to reach consensus on transactions. During a network delay, it will not be possible to record transactions in the shares on the blockchain. Should such a delay occur for an extended period of time, we could choose to effect transactions with shareholders manually (i.e., in book-entry form only) until such time as the network has resumed normal operation, whereby we will be bound to standard three-day turnaround rules pursuant SEC Rule 17Ad-2.

In the future, Issuer Assets may be maintained and recorded on a blockchain other than the Stellar network if we determines that such a change would be in the best interest of issuers and shareholders. Furthermore, securities may be available for purchase, sale, or transfer from one shareholder to another shareholder (or potential shareholder) (“peer-to-peer”) on the blockchain, including through the Stellar Decentralized Exchange or any other location in which issuer securities are registered to transact.

There are risks associated with the issuance, redemption, transfer, custody and record keeping of shares maintained and
recorded on a blockchain. For example, shares that are issued using blockchain technology are subject to the following risks (among others):
1. a rapidly-evolving regulatory landscape in the United States and in other countries, which might result in security, privacy or other regulatory concerns that could require changes to the way transactions in the shares are recorded;
2. the possibility of undiscovered technical flaws in our blockchain-integrated system or an underlying technology, including in the process by which transactions are recorded to a blockchain (particularly, the Stellar network blockchain), or by which the validity of a copy of such blockchain can be proven;
3. the possibility that cryptographic or other security measures that authenticate prior transactions for a blockchain could be compromised, or “hacked,” which could allow an attacker to alter the blockchain and thereby disrupt the ability to corroborate definitive transactions recorded on the blockchain;
4. the possibility that new technologies or services inhibit access to a blockchain;
5. the possibility that a breach to one blockchain could cause investors, and the public generally, to lose trust in blockchain technology and increase reluctance to issue and invest in assets recorded on blockchains; and
6. because of the differences between the way the shares are issued and recorded as compared to traditional securities, there is a risk that issues that might easily be resolved by existing law if traditional methods were involved may not be easily resolved for the shares. The occurrence of any related issue or dispute could have a material adverse effect on Issuer Assets.

The suitability of the Stellar network (and its underlying blockchain ledger) on which Issuer Assets rely could decline due to a variety of causes, adversely affecting the functionality of Issuer Assets. Blockchain networks are based on software protocols that govern the peer-to-peer interactions between computers connected to these networks. The suitability of the Stellar network for the functionality of the shares depends upon a variety of factors, including, but not limited to:
1. The effectiveness of the informal groups of (often uncompensated) developers contributing to the protocols that underlie the network;
2. Effectiveness of the validators and the network’s consensus mechanisms to effectively secure the network against confirmation of invalid transactions;
3. The continued participation of a number of trusted validators;
4. The lack of collusion between trusted validators;
5. Disputes among the developers or validators of the network;
6. Changes in the consensus or validation scheme that underlies the network;
7. The failure of cybersecurity controls or security breaches of the network;
8. The inability of validators to reach consensus and the consequential halting of transaction verification on the network;
9. The existence of undiscovered technical flaws in the network;
10. The development of new or existing hardware or software tools or mechanisms that could negatively impact the functionality of the systems;
11. The price of Stellar Lumens, the blockchain asset associated with the network;
12. The cost of transaction fees to use the Stellar network;
13. Intellectual property rights-based or other claims against the network’s participants;
14. The continued adoption of the Stellar network; and
15. The maturity of the computer software programming software development kit (“SDK”) used in connection with the network.

Because of the differences between the way the securities are issued and recorded as compared to securities in a traditional transfer agent, there is a risk that issues that might easily be resolved by existing law if traditional methods were involved may not be easily resolved for the Issuer Assets. The occurrence of any related issue or dispute could have a material adverse effect issuer securities valuations.

Blockchain networks currently face an uncertain regulatory landscape in not only the United States but also in many foreign jurisdictions such as the European Union and China. Various foreign jurisdictions may, in the near future, adopt laws, regulations or directives that affect the Stellar network and its users, developers and service providers that fall within such jurisdictions’ regulatory scope. Such laws, regulations, or directives may conflict with those of the United States or may directly and negatively impact Issuer Assets. The effect of any future regulatory change is impossible to predict, but such change could be substantial and adverse to investors.

Transactions by control persons

If you are a control person or otherwise affiliated with an issuer, you cannot sell their securities on the SDEX. You must contact affiliated-sales@blocktransfer.io to help facilitate a private transaction. Failure to follow this policy may result in account closure at our discression.

Signature Guarantee Program Specification

Block Transfer engages in all guarantee activities, as defined by SEC Rule 17Ad-15(a)(3) and referenced herein, with equitable treatment of all eligible guarantor institutions and classes of institutions. Block Transfer uses cryptographic signatures perpetually stored in the immutable Stellar blockchain for the acceptance of guarantees of securities transfers from eligible guarantor institutions. Individual asset holders are held to this same security standard for transfers. Stellar uses base-32 encoded Ed25519 keys generated by asset holders. Holders sign and broadcast Stellar transfers to the blockchain network using their keys. Anyone with a holder's keys can sign a transfer on their behalf, so eligible guarantor institutions and individuals alike should maintain utmost secrecy of their private keys, as best as able.

Participants can generate a keypair through any standard Stellar wallet and request it be linked with their identity by Block Transfer. Further instructions on this process are available in our investor portal. The process requires no more than a mobile phone and five minutes; anyone can easily onboard quickly. Guarantees are made and verified through private-key cryptographic signatures of instructions to transfer an asset or endorse a transfer. Participants can automatically generate such digital signatures through any standard Stellar wallet, though we recommend Lobstr.

So long as transfers are valid with the claimed signing public key, guarantees are accepted by the Stellar network no matter (and blind to) the original broadcaster. Otherwise, the transfer is rejected, and participants are immediately notified by the network why their signature and thus transfer was invalid via standard error codes in tandem with a local copy of the submitted invalid transfer.

Due to (i) local checks for signature validity in standard wallet interfaces and (ii) halted gossip propagation of invalid transactions on the Stellar blockchain, Block Transfer will, in a vast bulk of instances, not be made aware of rejected transfers given only a narrow range of transfers are invalid by false cryptographic attestation, while valid transfer signatures are instantaneously accepted by honest validating peers.

Most Stellar transactions clear in the next proposed block or one substantially close to it, with blocks created every five seconds on average. In a worst-case scenario, securityholders executing routine transfers on the blockchain may have to wait a few blocks (call it twelve very aggresively, as a denial of service attack over 45 seconds is economically infeasible for most market participants, and such a consensus attack for any amount of time over 180 blocks or approximately 15 minutes is for all intensive purposes statistically impossible, especially given our implimentation of issuer-enforced finality which effectivey caps transfer times at 24 seconds for 99.97% of transfers, n=1461). Therefore, we find it probabilistically impossible that, given the liveliness of the Stellar blockchain network, and posted and cleared transfer per the prior paragraph would ever in any conceivable way take more than 51840 blocks or three days after posting to the network pool of pending transfers. Thus, we assume all routine transfers executed on the Stellar blockchain without error consummated in under three days.

Block Transfer accepts and internalizes the risk of financial loss in the event persons have no recourse against any eligible guarantor institution and, in the opinion of its principals, maintains adequate protection against the issuance of unauthorized guarantees since such guarantees would equate to infeasibly breaking EdDSA given holders maintain robust security of their private keys.

Block Transfer retains the right to clawback assets sent in transfers if some participant can prove beyond all reasonable doubt that their secret key was stolen or they were violently coerced into a transfer. Such cases must prove theft or coercion in a competent court of law, as deemed fit by Block Transfer. As soon as some good-standing (meaning passed KYC, etc.) participant broadcasts a valid signed transfer to the Stellar network, Block Transfer can in no meaningful way stop the transfer from confirming regardless of the originating
sender. Block Transfer accepts all account balances on the Stellar ledger as material fact in the control books and master securityholder files of issuers. Upon change from a given issuer's prior transfer agent, all certificate-holding shareholders must validate their Stellar blockchain account at no cost to them through Block Transfer's KYC onboarding. Block Transfer will credit physical shareholders with their ownership stakes in DRS form on the Stellar blockchain.

Old paper certificates are thus null and void. We will never issue certificates. Block Transfer does not make a market for any of the issuers it services. Block Transfer will not directly accept or make payment with securities in exchange for value, except as a tender agent at its sole discresion pursuant to 17Ad-14. Rather, all good-standing market participants can directly trade assets through Stellar's decentralized exchange by signing order messages in their wallet."

We do not issue share certificates. This eliminates the costly problem of replacing lost, stolen or destroyed certificates.

Risks Applicable to Digital Securities

Block Transfer maintains direct registration records of security holders using digital securities accounted for on the Stellar blockchain network through controllable electronic records, which may pose unique risks to book-entry investors.

Controllable electronic records have the same rights, preferences, and privileges as traditional securities of the same class, but settle differently than traditional securities. Controllable electronic records are uncertificated, registered securities, the ownership and transfer of which are recorded on a blockchain ledger that will be publicly distributed. We recognize ledger transfers on the blockchain as material fact on issuer's capital books.

Generally, distributed ledger technology involves multiple copies of a synchronized electronic database, or distributed ledger, that are separately maintained by various participants on a network. Complex cryptographic processes are employed across the distributed ledger network as the means by which participants on the network achieve a consensus as to which transactions are valid, and therefore, should be immutably recorded within the relevant distributed ledger.

The validity of publicly available copies of the Stellar blockchain ledger can be mathematically proven utilizing cryptographically-secured distributed ledger network technology. The cryptographically-secured distributed ledger network technology employed with respect to controllable electronic records could be technology that is currently used for trading digital currencies (e.g., the Bitcoin blockchain), technology similar to that used for trading digital currencies that is adapted for trading controllable electronic records, or novel technology designed principally for transactions in controllable electronic records.

Our digital securities are traded an open trading system with limited volume and liquidity.

Because digital securities settle differently from traditional securities, such as shares of our issuers' common stocks traded on the national market system (“NMS”), our book-entry controllable electronic records are not be listed for trading on any stock exchange or through any other NMS trading platform. Our controllable electronic records are issued on a blockchain network that is not registered with the SEC and transacted through holder-posted orders generated using cryptography. Moreover, only holders with access to a blockchain wallet, such as one provided by us, will be able to buy and sell our controllable electronic records on the Stellar blockchain. Any disruption to the operations of the the Stellar blockchain would materially disrupt trading in, or potentially result in a complete halt in the trading of, our controllable electronic records.

Holders may place offers to buy or sell securities through the Stellar Decentralized Exchange, a free functionality of the Stellar blockchain network. Trades of controllable electronic records do not require the involvement of a central depositary, broker, ATS, or Block Transfer. Rather, controllable electronic records will be directly held and traded by their direct-registered owners on the Stellar ledger, which will be publicly published. The transaction costs associated with this process relate to the de minimis costs of Stellar network transactions conducted by holders in the event of transfer, private sale, or the like. As a result, Block Transfer—rather than clients or holders of our controllable electronic records—will bear such minimal costs required in connection with embedding cryptographic hash functions in the Stellar blockchain. The validity of publicly available copies of the Stellar ledger can then be mathematically proven utilizing cryptographically-secured distributed ledger network technology.

Because our controllable electronic records will be traded exclusively on a blockchain trading system, it is likely that there will be a limited number of holders of controllable electronic records. As a result, this novel trading system may have limited liquidity, resulting in a lower or higher price or greater volatility than would be the case with greater liquidity. You may not be able to resell your controllable electronic records on a timely basis or at all.

The use of distributed ledger technology is novel and untested with respect to controllable electronic records.

Our controllable electronic records trade on a novel, untested system developed by the Stellar Development Foundation for trading digital assets. 

This novel trading system is subject to all the usual risks associated with the fact it is new and untested, including:
• a rapidly-evolving regulatory landscape, which might include security, privacy or other regulatory concerns that could require Block Transfer to implement changes to its controllable electronic records trading system that could disrupt trading in our controllable electronic records;
• the possibility of undiscovered technical flaws in the Stellar blockchain network, including in the process by which transactions are recorded or by which the validity of a copy of the global ledger can be mathematically proven utilizing cryptographically-secured distributed ledger network technology;
• the possibility that cryptographic security measures that authenticate transactions and the blockchain for the applicable distributed ledger could be compromised, which could allow an attacker to alter the distributed ledger and thereby disrupt the ability to corroborate definitive transactions; and
• the possibility of breakdowns and trading halts as a result of flaws in the Stellar blockchain network that could prevent trades for a period of time.

Distributed ledgers we use are publicly available, which may give rise to privacy concerns.

Copies of the distributed ledger will be available to the public and will store the complete trading history from inception of the issuance of each series of controllable electronic records. As a result, robust and transparent trading data, other than holder identity, with respect to our controllable electronic records will be publicly available via the published proprietary and distributed ledgers. The controllable electronic records trading data will be secured by cryptographic key pairs and only the public-key-derived wallet address will be exposed to the public on the distributed ledger. The personal identity information necessary to associate a public key representing a given block of digital securities with the owner of those digital securities will be maintained in a separate database that is not exposed to the public. If there are security breaches with respect to the holders' personal identity information database resulting in theft of the information necessary to link personal identity with public keys, the stolen information could be used to determine the affected holder's complete trading history in our controllable electronic records. Moreover, concerns over these privacy issues may limit adoption of this novel trading system by a range of potential investors, reducing liquidity of our controllable electronic records.

The Stellar network will automatically publish to the internet information necessary to prove the validity of any book-entry transaction of controllable electronic records. This process ensures that anyone with basic cryptographic technical skills will have access on a near real-time basis to the embedded data necessary to prove the validity of any publicly available copy of the Stellar ledger. As a result, there will be robust and transparent trading data (specifically, the number of securities traded by each anonymized account, the price of each trade, and the balance of the securities held in each anonymized account) available to the general public. In addition, Block Transfer matches holders to transactions recorded on the Stellar blockchain ledger. As a result, Block Transfer has all information necessary to complete clients' capital books and records with respect to each controllable electronic record transaction (specifically, the identity of each digital security's owner, the number of securities traded in each transaction, the price of each trade and the balance of securities held by each owner).

The private cryptographic keys associated with controllable electronic records could be stolen.

Our controllable electronic records are represented by balances written on the Stellar blockchain and secured by cryptographic associated key pairs. The associated private key is necessary to effect the sale of a given block of our digital securities and, as such, is meant to be kept private. The general public, however, is not yet accustomed to using secure cryptographic methods and managing private keys.

The number of controllable electronic records traded on the Stellar blockchain may be very small, making the market price more easily manipulated.

While we understand that Block Transfer has adopted policies and procedures such that digital security holders are not free to manipulate the trading price of controllable electronic records contrary to applicable law, and while the risk of market manipulation exists in connection with the trading of any securities, the risk may be greater for our controllable electronic records because the Stellar Decentralized Exchange is a new system that does not have the same breadth of market and liquidity as the NMS. There can be no assurance that the efforts of Block Transfer will be sufficient to prevent such market manipulation. For example, there can be no assurance that multiple securityholders will not be able to manipulate the stock price by opening multiple accounts and trading amongst themselves.

Should distributed ledger technology cease to be available, investors may not be willing to transact in controllable electronic records.

Transactions in our controllable electronic records are recorded on the Stellar blockchain ledger, which will be electronically published on a real time basis. The blockchain ledger maintained by the Stellar network reflects the definitive ownership record with respect to our controllable electronic records. The validity of publicly available copies of the Stellar ledger can be mathematically proven utilizing cryptographically-secured distributed ledger network technology. If, for any reason, the distributed ledger technology utilized with respect to a series of our controllable electronic records were to become unavailable and suitable alternative technology were not available to be implemented, investors in such controllable electronic records would not have a means of proving the validity of publicly-available copies of the proprietary ledger. As a result, the accuracy of publicly-available trading information could be called into question and investors may elect to no longer transact in controllable electronic records.

We are not a stock exchange and has no listing requirements for issuers or for the securities recorded.

Unlike NMS trading platforms, there are no minimum price or other listing requirements for controllable electronic records to be traded on the Stellar blockchain. As a result, trades of our controllable electronic records on the Stellar blockchain may not be at prices that represent the national best bid or offer prices of securities that could be considered similar securities.

The price of our controllable electronic records, even when we issue equity controllable electronic records that rank on a parity with our clients' common stock, is not pegged to the value of our clients' common stock.

Fungible controllable electronic records can be converted or exchanged for traditional securities of the same class trading on the NMS. Notwithstanding, controllable electronic records may have significantly different pricing associated with the different trading environment for controllable electronic records as compared to securities trading the NMS. The following factors may drive such a pricing differential between our securities trading on the NMS and our equivalent book-entry controllable electronic records transacted between holders using the Stellar Decentralized Exchange:
• delays and fees associated with transfer from “street name” to direct registration;
• lower volume and liquidity of the digital securities on a closed trading system;
• immediate settlement of the digital securities compared to traditional T+2 settlement; and
• novelty of the controllable electronic record trading platform.

Transfers involving private company stock

Block Transfer periodically acts as an investor management platform for private companies with aspirations of one day going public. We allow all our accredited investors to transfer shares reasonably deemed exempt from registration under Securities Act Section 4(a)(1/2) and Rule 144/A ("restricted rules"). We shall not be liable for improper actions related to restricted securities including control persons disposing of >1% of the outstanding shares in a private company's stocks, as banned by definitions thereunder these restricted rules. We further do not support the maintenance of book-entry accounts for underwriters on the Stellar distributed ledger to prevent illegitimate securities sales. 

By agreeing to these Transfer Standards, you accept in writing these risks upon your account.

For concerns over these Standards, contact regulation@blocktransfer.io or mail to 99 Wall Street #4640, New York, NY 10005.