Compliance Overview

CapSign's compliance framework integrates traditional regulatory requirements with blockchain technology to create a transparent, immutable, and decentralized compliance system. By leveraging the Ethereum Attestation Service (EAS), CapSign provides a secure and verifiable method for maintaining regulatory compliance across digital asset offerings.

Executive Summary

CapSign's compliance framework represents a paradigm shift in regulatory compliance for digital assets. By leveraging blockchain technology through the Ethereum Attestation Service and purpose-built attestation schemas, we enable:

Reduced compliance costs through reusable attestations
Enhanced privacy through cryptographic verification
Improved regulatory confidence through immutable records
Streamlined investment processes while maintaining strict compliance standards

This framework provides the foundation for a more efficient, secure, and accessible financial system that meets or exceeds traditional compliance requirements while embracing the possibilities of decentralized technology.

🏗️ Decentralized Compliance Architecture

Ethereum Attestation Service Integration

CapSign utilizes the Ethereum Attestation Service as the foundation for its decentralized compliance infrastructure. This approach offers several key advantages:

Core Benefits

Immutable Verification Records: All compliance attestations are recorded on-chain, creating a permanent, tamper-proof record of verification.
Decentralized Validation: Compliance checks can be independently verified without relying on central authorities.
Portable Credentials: Once verified, attestations can be used across compatible platforms without requiring re-verification.
Privacy-Preserving: Only cryptographic proofs of attestations are shared, keeping sensitive personal information secure.

Technical Implementation

// Example Attestation Schema
struct ComplianceAttestation {
    bytes32 schemaUID;
    address attester;
    address recipient;
    uint64 time;
    uint64 expirationTime;
    bool revocable;
    bytes32 refUID;
    bytes data;
}

Integration Benefits

Cross-Platform Compatibility: Attestations work across the broader Ethereum ecosystem
Standardized Verification: Common standards for compliance verification
Reduced Friction: One-time verification for multiple platforms
Regulatory Compliance: Meets or exceeds traditional compliance requirements

📊 Attestation Schema Framework

The CapSign compliance system is built around three core attestation schemas that work together to provide comprehensive compliance coverage:

1. Customer Identification Schema

This schema captures essential KYC/AML elements while maintaining user privacy:

Data Elements

Identity verification (government-issued ID validation)
Address verification (proof of residence)
Risk assessment indicators (automated scoring)
PEP screening results (Politically Exposed Person status)
Sanctions screening status (OFAC and international lists)
Verification timestamps and expiration dates

Privacy Protection

Each attestation is linked to a wallet address, creating a verifiable on-chain record that the owner has completed the required identification process without exposing personal information.

Technical Schema

{
  "name": "Customer Identification",
  "description": "KYC/AML verification attestation",
  "schema": "bool kyc_verified, bool aml_cleared, uint8 risk_score, uint64 verification_date, uint64 expiration_date, string jurisdiction"
}

2. Investor Qualification Schema

This schema addresses accreditation requirements and investment eligibility:

Qualification Types

Accreditation status (accredited vs. non-accredited)
Qualification criteria met (income, net worth, professional certification)
Investment limits based on regulatory categorization
Verification method used (documentation type)
Attestation validity period (expiration timeline)
Jurisdictional qualifications (geographic restrictions)

Regulatory Compliance

These attestations enable compliant participation in regulated offerings without repeatedly sharing sensitive financial information.

Technical Schema

{
  "name": "Investor Qualification",
  "description": "Accreditation and eligibility verification",
  "schema": "bool accredited, uint256 investment_limit, string qualification_type, uint64 verification_date, uint64 expiration_date, string[] jurisdictions"
}

3. Investor Jurisdiction Schema

This schema handles the complex requirements of cross-border compliance:

Geographic Elements

Residency jurisdiction(s) (legal residence)
Tax jurisdiction(s) (tax obligations)
Regulatory restrictions applicable to the investor
Jurisdictional investment permissions (allowed investment types)
Geographic restrictions (blocked countries/regions)
Compliance with local securities laws
Jurisdictional transfer limitations (cross-border restrictions)

Cross-Border Compliance

Enables compliant international investment while respecting local regulations and restrictions.

Technical Schema

{
  "name": "Investor Jurisdiction",
  "description": "Geographic and regulatory jurisdiction verification",
  "schema": "string[] residence_jurisdictions, string[] tax_jurisdictions, string[] restrictions, bool[] investment_permissions, uint64 verification_date"
}

🔄 Implementation Methodology

Verification Process Flow

1. Document Collection

Secure upload of identity documents through the CapSign interface
Encrypted storage with access controls and audit logging
Document validation using automated and manual verification
Quality assurance checks for completeness and authenticity

2. Verification Processing

Multi-layer verification including automated and human review
Risk assessment using AI and machine learning algorithms
Sanctions screening against global watchlists
Quality control with manual oversight and validation

3. Attestation Creation

Cryptographic attestation generation stored on Ethereum
Schema validation ensuring data integrity and format compliance
On-chain recording with permanent, immutable storage
Privacy preservation through zero-knowledge proof techniques

4. Compliance Verification

Real-time compliance checking against regulatory requirements
Automated rule enforcement through smart contracts
Continuous monitoring for ongoing compliance
Alert generation for compliance issues or expiration

Continuous Compliance Monitoring

CapSign monitors attestation expiration dates and regulatory changes to ensure ongoing compliance:

Automated Systems

Expiration tracking with automated notifications for renewal
Regulatory change monitoring with impact assessment
Compliance status updates in real-time
Risk score adjustments based on changing circumstances

Remediation Workflows

Automated notifications for expiring attestations
Re-verification processes for expired credentials
Compliance gap identification and resolution
Regulatory update implementation with minimal disruption

Monitoring Capabilities

Real-time dashboards for compliance status
Automated alerts for compliance issues
Trend analysis for risk assessment
Regulatory reporting automation

🛡️ Risk Management Framework

Regulatory Risk Mitigation

Coverage Strategy

Jurisdictional coverage across major financial markets
Multi-regulator compliance (SEC, FCA, ESMA, etc.)
Regular compliance audits with independent third parties
Legal framework updates tracking regulatory changes

Adaptability Measures

Flexible attestation schemas to accommodate changing requirements
Rapid deployment capabilities for new regulations
Stakeholder communication for regulatory changes
Compliance training programs for staff and users

Audit and Documentation

Comprehensive audit trails for all compliance activities
Documentation standards meeting regulatory requirements
Evidence preservation for regulatory examinations
Reporting automation for regulatory submissions

Technical Risk Mitigation

Security Measures

Cryptographic security for all attestations and data
Multi-signature controls for critical operations
Access control systems with role-based permissions
Encryption standards for data at rest and in transit

Infrastructure Protection

Smart contract auditing and security review processes
Redundant verification systems for high availability
Disaster recovery and business continuity planning
Performance monitoring and optimization

Privacy Safeguards

Privacy-preserving data handling throughout the system
Zero-knowledge verification where possible
Data minimization principles in all processes
User consent management and privacy controls

📈 Benefits and Outcomes

For Users

Simplified verification with reusable attestations
Enhanced privacy through cryptographic proofs
Faster onboarding across multiple platforms
Lower costs through reduced verification overhead

For Platforms

Reduced compliance costs through shared verification
Faster user onboarding with trusted attestations
Enhanced trust through immutable records
Regulatory confidence through proven compliance

For Regulators

Transparent compliance with auditable records
Standardized verification across platforms
Real-time monitoring capabilities
Enhanced oversight through on-chain visibility

For the Ecosystem

Interoperability across platforms and services
Innovation enablement through compliance infrastructure
Market efficiency through reduced friction
Trust building in decentralized systems

Ready to learn more? Explore our interactive demos to experience the compliance framework in action, or dive deeper into implementation details.

Questions about compliance? Contact our compliance team at [email protected] or join our Discord community.

Executive Summary

Reduced compliance costs through reusable attestations
Enhanced privacy through cryptographic verification
Improved regulatory confidence through immutable records
Streamlined investment processes while maintaining strict compliance standards

🏗️ Decentralized Compliance Architecture

Ethereum Attestation Service Integration

CapSign utilizes the Ethereum Attestation Service as the foundation for its decentralized compliance infrastructure. This approach offers several key advantages:

Core Benefits

Immutable Verification Records: All compliance attestations are recorded on-chain, creating a permanent, tamper-proof record of verification.
Decentralized Validation: Compliance checks can be independently verified without relying on central authorities.
Portable Credentials: Once verified, attestations can be used across compatible platforms without requiring re-verification.
Privacy-Preserving: Only cryptographic proofs of attestations are shared, keeping sensitive personal information secure.

Technical Implementation

// Example Attestation Schema
struct ComplianceAttestation {
    bytes32 schemaUID;
    address attester;
    address recipient;
    uint64 time;
    uint64 expirationTime;
    bool revocable;
    bytes32 refUID;
    bytes data;
}

Integration Benefits

Cross-Platform Compatibility: Attestations work across the broader Ethereum ecosystem
Standardized Verification: Common standards for compliance verification
Reduced Friction: One-time verification for multiple platforms
Regulatory Compliance: Meets or exceeds traditional compliance requirements

📊 Attestation Schema Framework

The CapSign compliance system is built around three core attestation schemas that work together to provide comprehensive compliance coverage:

1. Customer Identification Schema

This schema captures essential KYC/AML elements while maintaining user privacy:

Data Elements

Identity verification (government-issued ID validation)
Address verification (proof of residence)
Risk assessment indicators (automated scoring)
PEP screening results (Politically Exposed Person status)
Sanctions screening status (OFAC and international lists)
Verification timestamps and expiration dates

Privacy Protection

Each attestation is linked to a wallet address, creating a verifiable on-chain record that the owner has completed the required identification process without exposing personal information.

Technical Schema

{
  "name": "Customer Identification",
  "description": "KYC/AML verification attestation",
  "schema": "bool kyc_verified, bool aml_cleared, uint8 risk_score, uint64 verification_date, uint64 expiration_date, string jurisdiction"
}

2. Investor Qualification Schema

This schema addresses accreditation requirements and investment eligibility:

Qualification Types

Accreditation status (accredited vs. non-accredited)
Qualification criteria met (income, net worth, professional certification)
Investment limits based on regulatory categorization
Verification method used (documentation type)
Attestation validity period (expiration timeline)
Jurisdictional qualifications (geographic restrictions)

Regulatory Compliance

These attestations enable compliant participation in regulated offerings without repeatedly sharing sensitive financial information.

Technical Schema

{
  "name": "Investor Qualification",
  "description": "Accreditation and eligibility verification",
  "schema": "bool accredited, uint256 investment_limit, string qualification_type, uint64 verification_date, uint64 expiration_date, string[] jurisdictions"
}

3. Investor Jurisdiction Schema

This schema handles the complex requirements of cross-border compliance:

Geographic Elements

Residency jurisdiction(s) (legal residence)
Tax jurisdiction(s) (tax obligations)
Regulatory restrictions applicable to the investor
Jurisdictional investment permissions (allowed investment types)
Geographic restrictions (blocked countries/regions)
Compliance with local securities laws
Jurisdictional transfer limitations (cross-border restrictions)

Cross-Border Compliance

Enables compliant international investment while respecting local regulations and restrictions.

Technical Schema

{
  "name": "Investor Jurisdiction",
  "description": "Geographic and regulatory jurisdiction verification",
  "schema": "string[] residence_jurisdictions, string[] tax_jurisdictions, string[] restrictions, bool[] investment_permissions, uint64 verification_date"
}

🔄 Implementation Methodology

Verification Process Flow

1. Document Collection

Secure upload of identity documents through the CapSign interface
Encrypted storage with access controls and audit logging
Document validation using automated and manual verification
Quality assurance checks for completeness and authenticity

2. Verification Processing

Multi-layer verification including automated and human review
Risk assessment using AI and machine learning algorithms
Sanctions screening against global watchlists
Quality control with manual oversight and validation

3. Attestation Creation

Cryptographic attestation generation stored on Ethereum
Schema validation ensuring data integrity and format compliance
On-chain recording with permanent, immutable storage
Privacy preservation through zero-knowledge proof techniques

4. Compliance Verification

Real-time compliance checking against regulatory requirements
Automated rule enforcement through smart contracts
Continuous monitoring for ongoing compliance
Alert generation for compliance issues or expiration

Continuous Compliance Monitoring

CapSign monitors attestation expiration dates and regulatory changes to ensure ongoing compliance:

Automated Systems

Expiration tracking with automated notifications for renewal
Regulatory change monitoring with impact assessment
Compliance status updates in real-time
Risk score adjustments based on changing circumstances

Remediation Workflows

Automated notifications for expiring attestations
Re-verification processes for expired credentials
Compliance gap identification and resolution
Regulatory update implementation with minimal disruption

Monitoring Capabilities

Real-time dashboards for compliance status
Automated alerts for compliance issues
Trend analysis for risk assessment
Regulatory reporting automation

🛡️ Risk Management Framework

Regulatory Risk Mitigation

Coverage Strategy

Jurisdictional coverage across major financial markets
Multi-regulator compliance (SEC, FCA, ESMA, etc.)
Regular compliance audits with independent third parties
Legal framework updates tracking regulatory changes

Adaptability Measures

Flexible attestation schemas to accommodate changing requirements
Rapid deployment capabilities for new regulations
Stakeholder communication for regulatory changes
Compliance training programs for staff and users

Audit and Documentation

Comprehensive audit trails for all compliance activities
Documentation standards meeting regulatory requirements
Evidence preservation for regulatory examinations
Reporting automation for regulatory submissions

Technical Risk Mitigation

Security Measures

Cryptographic security for all attestations and data
Multi-signature controls for critical operations
Access control systems with role-based permissions
Encryption standards for data at rest and in transit

Infrastructure Protection

Smart contract auditing and security review processes
Redundant verification systems for high availability
Disaster recovery and business continuity planning
Performance monitoring and optimization

Privacy Safeguards

Privacy-preserving data handling throughout the system
Zero-knowledge verification where possible
Data minimization principles in all processes
User consent management and privacy controls

📈 Benefits and Outcomes

For Users

Simplified verification with reusable attestations
Enhanced privacy through cryptographic proofs
Faster onboarding across multiple platforms
Lower costs through reduced verification overhead

For Platforms

Reduced compliance costs through shared verification
Faster user onboarding with trusted attestations
Enhanced trust through immutable records
Regulatory confidence through proven compliance

For Regulators

Transparent compliance with auditable records
Standardized verification across platforms
Real-time monitoring capabilities
Enhanced oversight through on-chain visibility

For the Ecosystem

Interoperability across platforms and services
Innovation enablement through compliance infrastructure
Market efficiency through reduced friction
Trust building in decentralized systems

Ready to learn more? Explore our interactive demos to experience the compliance framework in action, or dive deeper into implementation details.

Questions about compliance? Contact our compliance team at [email protected] or join our Discord community.

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