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xGov 183: Choice Coin Compliance
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| id: 183 | ||
| period: 4 | ||
| title: Choice Coin Compliance | ||
| author: Brian Haney (@Bhaney44) | ||
| email: [email protected] | ||
| discussions-to: https://forum.algorand.org/t/xgov-183-choice-coin-compliance/11761 | ||
| company_name: Choice Coin DAN - Indepedent | ||
| category: dApps | ||
| focus_area: Other | ||
| open_source: Yes | ||
| funding_type: Proactive | ||
| amount_requested: 53000 | ||
| delivery_date: 2024-12-01 | ||
| status: Final | ||
| --- | ||
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| ## Abstract | ||
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| The purpose for this grant is building a mechanism for establishing a culture of ethics and compliance for projects on Algorand. | ||
| The focus for this work will center around U.S. securities compliance, providing new resources for structuring Algorand Standard Assets (ASAs) to ensure regulatory compliance. | ||
| This software will add value to Algorand by: | ||
| 1) helping to reduce regulatory risk; | ||
| 2) reducing the risk of litigation or increasing the probability of success in the event of a class action lawsuit; and | ||
| 3) help to streamline efficiency in the development of new assets in accordance with U.S. Law and create a more ethical and corporate culture on the Algorand network. | ||
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| This grant is milestone based and this specific proposal is for the completion of milestone 1. | ||
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| ## Team | ||
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| Brian Haney | GitHub @bhaney44 | ||
| Brian has the unique expercience necessary to succeed with this project. | ||
| Indeed, he has substantial experience both as an OSS dev on Algorand and as a securities lawyer. | ||
| He has also been building the Choice Coin Compliance software over the past three years. | ||
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| David Kazeem | GitHub @davonjagah | ||
| David is an award winning developer with expertise in systems architecture and engineering. | ||
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| Samuel Tosin | GitHub @Samuellyworld | ||
| Sam is a full-stack developer with extensive experience building on Algorand and in Web 3. | ||
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| ## Experience with Algorand | ||
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| We have full stack OSS experience building and managing development of voting software on Algorand. | ||
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| <a href= "https://github.com/ChoiceCoin/v2"> Choice Coin v2 </a> | ||
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| <a href= "https://github.com/ChoiceCoin/Voting"> Choice Coin Voting </a> | ||
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| < href = "https://github.com/ChoiceCoin/Compliance"> Choice Coin Compliance </a> | ||
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| We also have extensive experience writing research on Algorand. | ||
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| <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3913316"> Decentralized Decisions on Algorand with Choice Coin </a> | ||
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| <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3819055"> Algorand Autonomous </a> | ||
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| <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4111692"> Choice Coin v2 </a> | ||
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| I am also active in the Algorand Developer Forum and have been participating in discussion there since April of 2021. | ||
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| <a href = "https://forum.algorand.org/u/bhaney44">Brian Haney Algorand Forum</a> | ||
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| ## Present Proposal | ||
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| Problem Statement: | ||
| Regulatory ambiguity and high costs hinder innovation in decentralized markets. | ||
| Compliance with U.S. securities law is burdensome and expensive for asset creators, particularly for new projects. | ||
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| Proposed Solution: Choice Coin Compliance AI | ||
| Develop an embedded system utilizing natural language processing to assess the probability of an asset being classified as a security. | ||
| Offer Compliance AI as a service, providing automated regulatory risk assessment for projects on Algorand. | ||
| Incorporate software as a service (SaaS) product and compliance AI web application for generating compliance reports. | ||
| Provide subscription-based access to the compliance AI, allowing users to onboard, complete compliance tasks, and receive certification from licensed attorneys. | ||
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| Features and Benefits: | ||
| Reduces regulatory risk for asset creators by aiding in the engineering of assets to avoid SEC classification as securities. | ||
| Formalizes expert knowledge into an automated system for probabilistic assessment. | ||
| Offers monthly subscriptions for continuous compliance monitoring and updates. | ||
| Provides ongoing support and services for maintaining compliance certification. | ||
| Ensures projects stay abreast of evolving legal requirements in the decentralized market landscape. | ||
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| Implementation Plan: | ||
| Develop and refine the Compliance AI system. | ||
| Launch the SaaS product and compliance AI web application. | ||
| Offer subscription-based access for users to onboard and complete compliance tasks. | ||
| Provide ongoing support and updates, including monthly checkups and continuous compliance tasks. | ||
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| Expected Outcome: | ||
| Empower asset creators with a cost-effective solution for navigating regulatory compliance. | ||
| Foster innovation and growth in decentralized markets by mitigating regulatory barriers. | ||
| Establish Choice Coin Compliance AI as a leading provider of compliance automation in the decentralized space. | ||
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| ### Deliverable | ||
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| Milestone 1: Grant Contract, Database Generation | ||
| Deliverables: Signed Contract, Database, GitHub OSS Repository, Milestone Report | ||
| Schedule: 4 weeks | ||
| Team Member Responsible: Brian Haney and David Kazeem | ||
| Grant Payment: 53,000 ALGO | ||
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| Milestone 1: Database Generation | ||
| Description: This first phase will support the development of a comprehensive compliance database for digital assets and securities. | ||
| The database will be open source and will include data regarding SEC enforcement efforts, cryptocurrency litigation, relevant case law, legislation and regulation, and secondary sources. | ||
| Database, GitHub Repository, OSS Repo, Milestone Report | ||
| Evaluation Metrics: Clean open source database of information. | ||
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| ## Future Blueprint | ||
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| Milestone 2: Research and Development | ||
| Deliverables: Research Paper, GitHub Repository, OSS Repo, OSS License, Milestone Report | ||
| Schedule: 4 weeks | ||
| Team Member Responsible: Brian Haney and David Kazeem | ||
| Grant Payment: 39,000 ALGO | ||
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| Milestone 3: Compliance AI Application Deployment to Testnet | ||
| Deliverables: Testnet application, GitHub OSS Repository, Milestone Report | ||
| Schedule: 4 weeks | ||
| Team Member Responsible: Brian Haney and Sam Tosin | ||
| Grant Payment: 39,000 ALGO | ||
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| Milestone 4: Main Network Launch | ||
| Deliverables: Mainnet web-application, GitHub OSS Repository, Milestone Report | ||
| Schedule: 4 weeks | ||
| Team Member Responsible: Brian Haney and Sam Tosin | ||
| Grant Payment: 39,000 ALGO | ||
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| Milestone 2: Research and Development | ||
| Description: This second phase will allow for the structured development of the web application. | ||
| This will include writing a research paper outlining the software. | ||
| Additionally, this phase will result in an initial prototype, which will be open source on GitHub. | ||
| Evaluation Metrics: Research Paper, GitHub Repository, OSS Repo, OSS License, Milestone Report | ||
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| Milestone 3: Testnet application, GitHub OSS Repository, Milestone Report | ||
| Description: This third phase will support the development of the compliance AI for automation. | ||
| The AI will use an embedded system to formalize expert knowledge to provide an automated regulatory risk assessment. | ||
| The technology will also be used to power the Choice Coin Compliance platform. | ||
| Users will have an interface, where they login and proceed through tasks to help to validate their legal compliance. | ||
| Evaluation Metrics: Compliance AI Application Deployment to Testnet; User Login; Key features available. | ||
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| Milestone 4: Main Network Launch | ||
| Description: The final phase will support the MainNet launch for both the Compliance AI and Algorand Compliance Web Application. | ||
| This will include an internal security assessment, as well as an analysis by a licensed regulatory attorney regarding the software. | ||
| Evaluation Metrics: Mainnet web-application, GitHub OSS Repository, Milestone Report | ||
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| Our goal will be to start a non-profit for Choice Coin Compliance, which will provide a mechanism for helping projects comply with applicable legal regulations. | ||
| To qualify for non-profit status, this project will serve the pubic good by providing a mechanism to help projects follow the law. | ||
| This way, projects that want to appropriate resources toward following the law will have a more clear path to doing so. | ||
| Projects will be able to pay a monthly subscription fee to recieve continuous compliance checkups and support. | ||
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| Over time, Choice Coin Compliance intends to grow to be a one stop shop for projects seeking to optimize regulatory compliance in Web 3. | ||
| We will work toward certifying projects that on board with the platform with a blue check on Vestige, DeFly, and Pact. | ||
| This will allow asset purchasers to know which projects have been certified as compliant. | ||
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| In envisioning the future directions for scaling the Choice Coin Compliance software, several key avenues emerge that can further enhance its impact and effectiveness within the Algorand community and beyond. | ||
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| Firstly, the software's scalability can be bolstered through continuous technological advancements and optimizations. | ||
| As the volume and complexity of digital assets on the Algorand blockchain grow, the Compliance AI must evolve to handle increased demand and maintain high performance. | ||
| This entails ongoing research and development efforts to optimize algorithms, improve computational efficiency, and leverage emerging technologies such as machine learning and artificial intelligence to enhance the software's capabilities. | ||
| Additionally, the software architecture should be designed with scalability in mind, enabling seamless integration with other blockchain protocols and supporting interoperability across diverse ecosystem participants. | ||
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| Secondly, expanding the scope and coverage of the Compliance AI's regulatory analysis can enrich its value proposition and appeal to a broader audience. | ||
| While the initial focus may be on securities compliance within the United States, future iterations of the software could incorporate regulatory frameworks from other jurisdictions worldwide. | ||
| This global approach enables asset creators operating in diverse markets to assess compliance requirements comprehensively and tailor their strategies accordingly. | ||
| Furthermore, the Compliance AI can broaden its scope beyond securities regulations to encompass other regulatory domains such as data privacy, anti-money laundering (AML), and know-your-customer (KYC) compliance, providing users with a holistic compliance solution for their digital asset endeavors. | ||
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| Thirdly, fostering a vibrant ecosystem of developers, contributors, and users is paramount to the long-term success and sustainability of the Choice Coin Compliance software. Building an open and collaborative community around the software encourages knowledge sharing, innovation, and continuous improvement. | ||
| This can be achieved through initiatives such as developer outreach programs, hackathons, and community-driven development sprints that invite participation from stakeholders across the Algorand ecosystem. | ||
| Additionally, establishing partnerships with industry organizations, academic institutions, and regulatory bodies can enrich the software's regulatory intelligence and broaden its reach, creating a network effect that accelerates adoption and drives ecosystem growth. | ||
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| In summary, the future directions for scaling the Choice Coin Compliance software involve a multi-faceted approach that encompasses technological innovation, regulatory expansion, and community engagement. | ||
| By continually refining the software's capabilities, extending its regulatory coverage, and nurturing a vibrant ecosystem of contributors and users, Choice Coin can position itself as a trusted and indispensable compliance solution for asset creators on the Algorand blockchain and beyond. | ||
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| ## Benefits for the community | ||
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| Enhanced Regulatory Compliance: By funding the Choice Coin Compliance AI proposal, the Algorand community can contribute to enhancing regulatory compliance within the ecosystem. | ||
| The Compliance AI software will provide asset creators on Algorand with automated tools and resources to assess the regulatory status of their digital assets accurately. | ||
| This proactive approach to compliance not only reduces the risk of regulatory scrutiny and enforcement actions but also fosters a culture of responsibility and professionalism within the Algorand community. | ||
| Ultimately, enhanced regulatory compliance can attract more institutional investors, exchanges, and businesses to the Algorand ecosystem, driving broader adoption and sustainable growth. | ||
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| Increased Market Access and Liquidity: Funding the Choice Coin Compliance AI proposal can lead to increased market access and liquidity for Algorand-based assets. | ||
| Exchanges and trading platforms often hesitate to list assets that may be classified as securities due to regulatory concerns. | ||
| By leveraging the Compliance AI software to engineer digital assets for compliance with securities regulations, asset creators can enhance the likelihood of their assets being listed on reputable exchanges, thus increasing market liquidity and accessibility for investors. | ||
| This, in turn, can attract more capital and liquidity to the Algorand ecosystem, fueling innovation and ecosystem development. | ||
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| Strengthened Reputation and Trust: Supporting the Choice Coin Compliance AI proposal can strengthen the reputation and trustworthiness of the Algorand blockchain as a compliant and reputable platform for digital asset issuance and trading. | ||
| By providing asset creators with transparent and reliable compliance solutions, Algorand demonstrates its commitment to regulatory compliance and investor protection. | ||
| This proactive approach not only mitigates legal and regulatory risks for Algorand-based projects but also builds trust and confidence among investors, users, and regulatory authorities. | ||
| As a result, the Algorand community can attract more high-quality projects, partnerships, and investments, further solidifying its position as a leading blockchain platform for innovative solutions and responsible growth. | ||
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| Increases in centralized exchange listings for ASAs: Other L1s, such as Ethereum (ERC 20 tokens) and Solana (SPL tokens) have relationships with Coinbase that allows for their assets to be listed. | ||
| Algorand does not have such a relationship with Coinbase, or any other major exchange. | ||
| Probably the most important thing centralized exchanges consider when listing assets is compliance. | ||
| Having a one-stop shop for Algorand projects with ASAs to certify compliance will enable them to improve the possibility of being listed on CEXs. | ||
| This will significantly improve the value of ASAs, and ALGO in return. | ||
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| Overall, funding the Choice Coin Compliance AI proposal can bring significant benefits to the Algorand community, including enhanced regulatory compliance, increased market access and liquidity, and strengthened reputation and trust. | ||
| These benefits contribute to the long-term success and sustainability of the Algorand ecosystem, driving broader adoption, innovation, and ecosystem growth. | ||
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| ## Additional information | ||
| Thank you for your consideration. |