SYSTEMS AND METHODS FOR TRADING, CLEARING AND SETTLING SECURITIES TRANSACTIONS USING BLOCKCHAIN TECHNOLOGY

• US 20170011460A1
• Filed: 06/30/2016
• Published: 01/12/2017
• Est. Priority Date: 07/09/2015
• Status: Abandoned Application

• Current Assignee: Templum, Inc.
• Original Assignee: Ouisa, LLC
• Inventors: Molinari, Vincent, Latona, Joe, Pallotta, Christopher J., Friedman, Clifford H.
• Application Number:
  US15/198,136
• Publication Number:
  US 20170011460A1
• Time in Patent Office: Days
• US Class Current: 1/1
• CPC Class Codes: G06F 21/645 using a third party
• CPC Class Codes: G06Q 20/36 using electronic wallets or electronic money safes
• CPC Class Codes: G06Q 20/363 with the personal data of a user
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: H04L 63/0442 wherein the sending and receiving network entities apply asymmetric encryption, i.e. different keys for encryption and decryption cryptographic mechanisms or cryptographic arrangements for public-key encryption H04L9/30
• CPC Class Codes: H04L 63/0823 using certificates cryptographic mechanisms or cryptographic arrangements for entity authentication involving certificates H04L9/3263
• CPC Class Codes: H04L 67/104 Peer-to-peer [P2P] networks
• CPC Class Codes: H04L 67/1042 using topology management mechanisms
• CPC Class Codes: H04L 9/0637 Modes of operation, e.g. cipher block chaining [CBC], electronic codebook [ECB] or Galois/counter mode [GCM]
• CPC Class Codes: H04L 9/3247 involving digital signatures
• CPC Class Codes: H04L 9/50 using hash chains, e.g. blockchains or hash trees

Abstract

The present invention relates to a securities trading system that utilizes a distributed blockchain ledger to conduct security transactions. Users are provided with cryptographic wallets that enable the users to access a peer-to-peer network of computing nodes on which the distributed blockchain ledger is managed. The securities made available through the network may be stored directly on the blockchain ledger itself. Smart contracts may be utilized to transfer the securities among the users and to verify that all transactions are in compliance with applicable regulatory rules and other restrictions.

Claims

1. A computerized system for managing securities over a network, the system comprising:

a plurality of computing devices that are in communication with one another over a peer-to-peer communication network, wherein each of the computing devices includes a processor and a physical storage medium that stores;

at least a portion of a distributed blockchain ledger that includes a distributed database that records information associated with security transactions that occur on the peer-to-peer communication network; and

a cryptographic wallet that includes encryption protocols for securely storing a virtual portfolio of securities and that further includes;

a first set of protocols for issuing securities, wherein the first set of protocols are configured to store the securities directly on the distributed blockchain ledger by utilizing a one-way hashing algorithm to append one or more blocks to the distributed blockchain ledger, the one or more blocks at least including base security documents associated with the securities, sets of security rules comprising regulations and restrictions governing the securities, and ownership identifiers which identify one or more owners of the securities, and

a second set of protocols for transferring ownership of the securities to other cryptographic wallets stored on other computing devices in the peer-to-peer communication network;

wherein the first set of protocols and second set of protocols, when executed by the processor, enable updating of the distributed database associated with the distributed blockchain ledger to issue and transfer the securities.

2. The system of claim 1, wherein the second set of protocols utilize one or more event-driven smart contracts which are configured to transfer ownership of the securities, the one or more smart contracts being made available through the cryptographic wallet and permitting a buyer and a seller to submit information for satisfying ownership transfer terms.

3. The system of claim 2, wherein the second set of protocols enable the cryptographic wallet to access and retrieve the sets of security rules from the distributed blockchain ledger and to configure the smart contracts to verify compliance with the regulations and restrictions which apply to the securities.

4. The system of claim 2, wherein a first set of blocks are appended to the distributed blockchain ledger in response to smart contracts being utilized to initiate security trades and a second set of blocks are appended to the distributed blockchain ledger to indicate whether or not the security trades are completed or denied.

5. The system of claim 1, wherein the first set of protocols utilize one or more event-driven smart contracts which are configured to onboard new securities to the system, the one or more smart contracts being made available through the cryptographic wallet and permitting a registered issuer to issue new securities.

6. The system of claim 1, wherein the cryptographic wallet enables an issuer to create a security fund that pools together investments from a plurality of investors.

7. The system of claim 6, wherein the cryptographic wallet provides one or more event-driven smart contracts that enable the plurality of investors to contribute to the security fund and to deploy assets from the security fund to a plurality of borrowers.

8. The system of claim 7, wherein the cryptographic wallet is configured to append blocks to the distributed blockchain ledger associated with investing and borrowing transactions.

9. The system of claim 1, wherein the cryptographic wallet is configured to append blocks to the distributed blockchain ledger which enable a master account associated with one or more of the securities to assign permissions to one or more sub-accounts.

10. A method for managing securities over a network, the method comprising:

providing a plurality of computing devices with access to a peer-to-peer communication network, wherein each of the computing devices includes a processor and a physical storage medium;

storing at least a portion of a distributed blockchain ledger on the plurality of computing devices, the distributed blockchain ledger including a distributed database that records information associated with security transactions that occur on the peer-to-peer communication network; and

storing a cryptographic wallet on each of the plurality of computing devices that includes encryption protocols for securely managing a virtual portfolio of securities, wherein the cryptographic wallet further includes;

a first set of protocols for issuing securities, wherein the first set of protocols are configured to store securities directly on the distributed blockchain ledger by utilizing a one-way hashing algorithm to append one or more blocks to the distributed blockchain ledger, the one or more blocks at least including base security documents associated with the securities being issued, sets of security rules comprising regulations and restrictions governing the securities, and ownership identifiers which identify one or more owners of the securities, and

a second set of protocols for transferring ownership of the securities to other cryptographic wallets stored on other computing devices in the peer-to-peer communication network;

wherein the first set of protocols and second set of protocols, when executed by the processor, enable updating of the distributed database associated with the distributed blockchain ledger to issue and transfer the securities.

11. The method of claim 10, wherein the second set of protocols utilize one or more event-driven smart contracts which are configured to transfer ownership of the securities, the one or more smart contracts being made available through the cryptographic wallet and permitting a buyer and a seller to submit information for satisfying ownership transfer terms.

12. The method of claim 11, wherein the second set of protocols enable the cryptographic wallet to access and retrieve the sets of security rules from the distributed blockchain ledger and to configure the smart contracts to verify compliance with the regulations and restrictions which apply to the securities.

13. The method of claim 11, wherein a first set of blocks are appended to the distributed blockchain ledger in response to smart contracts being utilized to initiate security trades and a second set of blocks are appended to the distributed blockchain ledger to indicate whether or not the security trades are completed or denied.

14. The method of claim 10, wherein the first set of protocols utilize one or more event-driven smart contracts which are configured to onboard new securities to the system, the one or more smart contracts being made available through the cryptographic wallet and permitting a registered issuer to issue new securities.

15. The method of claim 10, wherein the cryptographic wallet enables an issuer to create a security fund that pools together investments from a plurality of investors.

16. The method of claim 15, wherein the cryptographic wallet provides event-driven smart contracts that enable the plurality of investors to contribute to the security fund and to deploy assets from the security fund to a plurality of borrowers.

17. The method of claim 16, wherein the cryptographic wallet is configured to append blocks associated with investing and borrowing transactions to the distributed blockchain ledger.

18. The method of claim 10, wherein the cryptographic wallet is configured to append blocks to the distributed blockchain ledger which enable a master account associated with one or more of the securities to assign permissions to one or more sub-accounts.