- Tokensoft is a security token issuance platform processing $1B+ in capital across 1M+ users since 2017
- ERC-1404 — co-authored by Tokensoft — is the only token standard used in a fully SEC-registered securities offering
- 80,000+ investors onboarded per hour; $10M/hour capital throughput during live raises
- Zero hacks, zero SEC enforcement actions in eight years of production operations
- First SEC-registered IPO (INX, $85M) and first '40 Act fund (ArCoin) on a public blockchain
Tokensoft is a security token issuance and management platform built for issuing regulated securities on a blockchain. Founded in 2017, it is the infrastructure behind the first SEC-registered security token IPO in U.S. history. The platform handles the full lifecycle — token design, smart contract deployment, investor KYC, compliance enforcement, distribution, and post-issuance administration — for stablecoins, equity tokens, debt instruments, and SEC-registered offerings.
The Regulatory Problem That Required a New Standard
Issuing a security on a blockchain in 2017 created an immediate compliance problem. ERC-20 — the dominant token standard at the time — was designed for fungible utility tokens. It had no mechanism for enforcing transfer restrictions. Any holder could send any token to any address. For securities, that is a federal violation waiting to happen.
The Securities Act of 1933 and the Securities Exchange Act of 1934 require that securities can only be transferred to eligible holders. Section 5 prohibits unregistered securities sales. Rule 144 imposes holding periods. Regulation D requires transfers only to qualified purchasers. Regulation S restricts transfers to U.S. persons during the restricted period. None of these could be enforced at the ERC-20 layer.
Tokensoft co-authored ERC-1404 to solve this. It extends ERC-20 with two functions: detectTransferRestriction and messageForTransferRestriction. Before any transfer executes, the contract calls detectTransferRestriction. If the check returns a non-zero code, the transfer reverts. This is the only token standard to have been used in fully SEC-registered securities offerings under both the Securities Act of 1933 and the Investment Company Act of 1940.
How the Platform Works
Token Design and Deployment
The platform supports equity tokens, debt instruments, fund shares, and stablecoins across Ethereum mainnet and any EVM-compatible chain — Avalanche, Polygon, Base — from the same issuance engine. Configuration (vesting schedules, lock-up periods, transfer restrictions, governance rights) happens at the contract level. The contract is the source of truth, not a database.
KYC and Investor Onboarding
The KYC engine handles accreditation verification under Rule 501 of Regulation D, entity KYC, OFAC and PEP screening, biometric identity verification via Onfido, and GDPR-compliant data handling. It supports jurisdictional rule sets across 52 countries. Peak throughput: 80,000+ investor registrations per hour.
Compliance Enforcement
Transfer restrictions are enforced at the ERC-1404 layer — in the contract, not in middleware. A transfer that fails a compliance check does not execute. Traditional securities compliance is remedial: a transfer executes, then someone checks if it was valid. ERC-1404 is preventative: invalid transfers are blocked before they happen. There is nothing to unwind.
Distribution and Post-Issuance
Capital throughput during live offering windows: $10 million per hour. Post-close, cap table management, governance, dividends, and transfer agent functions run through the same system. The cap table is the blockchain — one record, always current, no reconciliation.
How Tokensoft Compares to Other Tokenization Platforms
| Capability | Tokensoft | Securitize | Fireblocks |
|---|---|---|---|
| SEC-registered offerings completed | ✅ Yes (INX, ArCoin) | ❌ No | ❌ No |
| Compliance enforcement layer | ✅ On-chain (ERC-1404) | ⚠️ Application layer | ⚠️ Application layer |
| Token standard co-authored | ✅ ERC-1404 (Sept 2018) | ❌ — | ❌ — |
| SEC divisions engaged | ✅ 6 divisions (2017–2022) | Limited | Limited |
| KYC throughput | ✅ 80,000+/hr | Not published | Not published |
| Multi-chain issuance | ✅ Ethereum + all EVM | Ethereum-primary | Multi-chain |
| Air-gapped custody | ✅ QR offline signing | ❌ — | ⚠️ MPC online |
| Production since | 2017 | 2017 | 2019 |
Stablecoins and Wrapped Assets
For stablecoins and wrapped assets, a regulated custodian holds the underlying asset. Tokensoft monitors the custody position via custodian API and mints a corresponding on-chain token — one token per unit of underlying. When the custodian confirms a redemption, the corresponding tokens burn. This architecture was used for wrapped XRP (wXRP), wrapped BTC (xBTC on Stacks), and other cross-chain assets.
Scale and Security Record
$1B+ capital processed. 1M+ users. 100+ tokenizations. 900,000+ registered accounts across 100+ countries. $18B combined market cap of customers. 52 jurisdictions. 150+ countries. Zero hacks. Zero SEC enforcement actions. Eight years of production operations.
Frequently Asked Questions
What is the Tokensoft tokenization platform?
Tokensoft's tokenization platform is end-to-end infrastructure for issuing and managing securities on a blockchain. It handles token design, smart contract deployment, KYC onboarding at 80,000+ investors per hour, ERC-1404 compliance enforcement, distribution, and post-issuance cap table administration. It has processed $1B+ in capital across 100+ tokenizations for 1M+ users since 2017.
What is ERC-1404 and why does it matter for security tokens?
ERC-1404 is a token standard for Ethereum, co-authored by Tokensoft in September 2018, that adds on-chain transfer restrictions to ERC-20 tokens. Before any transfer executes, the contract checks whether the transfer is compliant — if not, it reverts. It is the only token standard used in a fully SEC-registered securities offering.
Has Tokensoft's platform been used in SEC-registered offerings?
Yes. Tokensoft powered INX Limited's IPO — the first security token offering registered under the Securities Act of 1933, raising $85M from 11,700+ investors (notice of effectiveness August 2020). Tokensoft also powered the Arca US Treasury Fund (ArCoin), the first closed-end fund registered under the Investment Company Act of 1940 to issue shares as digital securities on Ethereum (notice of effectiveness July 2020).
How does Tokensoft compare to Securitize or Fireblocks for security token issuance?
Tokensoft is the only platform whose compliance architecture has been reviewed and accepted by the SEC in the context of fully registered offerings under both the Securities Act of 1933 and the Investment Company Act of 1940. Its ERC-1404 enforcement is at the smart contract layer — transfers to ineligible addresses revert on-chain and cannot happen regardless of application behavior. Neither Securitize nor Fireblocks have completed SEC-registered offerings.
What regulations does the platform support?
Regulation D (506b and 506c), Regulation S, Regulation A+, and fully SEC-registered offerings under the Securities Act of 1933 and the Investment Company Act of 1940. Investor compliance across 52 jurisdictions and 150+ countries.
What blockchains does Tokensoft support?
Ethereum mainnet and any EVM-compatible chain including Avalanche, Polygon, and Base. The platform also supports wrapped assets on non-EVM chains (Bitcoin via xBTC on Stacks, XRP via wXRP on Ethereum) through a custodian-backed mint/burn architecture.
The Tokensoft platform is the compliance infrastructure that made SEC-registered security tokens possible — and the foundation for what comes next.
Contact Us →Last updated: April 10, 2026 · Tokensoft Inc. · Back to Blog