Module 1 — Equities

Section 8: Module 1 — Equities

RWA Tokens Platform Whitepaper · Version 10.0 Groovy Company, Inc. · May 2026 Document Reference: RWA-M1-SPEC-001 v1.0

Module 1 is the equity-securities tokenization module. It addresses the full equity addressable surface — from sub-$1M OTC microcap (where Ethereum L1 tokenization is economically impossible) through NASDAQ / AMEX / TSX-listed mid-to-large-cap equity, and on to global-exchange equity tokenization. Module 1 is the architectural baseline: V8 mints are Module 1 mints with module = 1 in SecurityConfig. Modules 2 and 3 extend Module 1 with module-aware Transfer Hook extensions.

8.1 Scope

Asset Tier

Description

Default max_wallet_percent

OTC microcap

Sub-$10M market cap; OTCID-tier US issuers

499 bps (4.99%) — §13(d) sensitivity

OTC mid-cap

$10M – $100M; OTCQB / OTCQX-tier

499 bps (4.99%)

NASDAQ-listed

Listed equity (capital, global, global-select)

999 bps (9.99%)

AMEX / NYSE-listed

Listed equity

999 bps (9.99%)

TSX-listed

Toronto Stock Exchange

999 bps (9.99%)

Foreign exchange

Global equity tokenization (Phase 2 expansion)

Per-mint (≤ 999 bps)

max_wallet_percent is configurable at mint initialization within statutory bounds. The default for OTC microcap (499 bps) protects against §13(d) reporting-threshold inadvertent triggers; the default for listed equity (999 bps) reflects standard institutional concentration norms.

8.2 Backing Instrument — Common Class B

Each Module 1 ST22 token is backed 1:1 by Common Class B shares of the issuing company. The platform standardizes on a Common Class B class because it aligns with the SEC Crypto Task Force directive of March 30, 2026 and provides:

Direct beneficial ownership representation (Pillar 4 of Category 1 Model B)
Standard corporate-governance attributes (voting, dividends, liquidation preference per Certificate of Designation)
Compatibility with §17A custody and DTC ownership-chain mapping (Pillar 5)
Avoidance of the regulatory complexity that attaches to preferred-class tokenization

8.2.1 Certificate of Designation

The issuer files a Certificate of Designation with the Secretary of State of its jurisdiction of incorporation specifying the Common Class B shareholder rights. The Certificate is the legally controlling instrument; the on-chain ST22 ledger is the transfer-notification layer per W.S. 34-29-101 et seq. Required Certificate provisions include:

Class designation: "Common Class B"
Authorized share count
Voting rights (1:1 with Common Class A unless otherwise specified)
Dividend rights (pari passu with Common Class A unless otherwise specified)
Liquidation preference
Conversion rights (none, by default)
Transfer restrictions consistent with Reg D / Reg S / Reg CF
Designation that Empire Stock Transfer is the §17A transfer agent

8.2.2 1:1 Backing Verification

The Custody Oracle PDA per Module 1 mint stores Empire's Ed25519-signed attestation of custodied_balance (Common Class B shares held in Empire custody for this mint). Control CV-01 verifies on every transfer:

total_supply + transfer_amount ≤ custodied_balance

If the inequality fails, the transfer reverts with Error 6001 (CustodyDiscrepancy). Empire publishes attestations every Solana slot (~400 ms cadence). Control CV-02 (CustodyOracleUnavailable) rejects transfers if the most recent attestation is more than 1 slot stale.

8.3 Asset Identifier — CUSIP

Module 1 mints carry the issuer's CUSIP (Committee on Uniform Security Identification Procedures) as the asset identifier. The CUSIP is bound at mint initialization in SecurityConfig.asset_identifier (32-byte field; CUSIP padded). Control CV-05 rejects any transfer where the bound CUSIP does not match the Custody Oracle's reported asset-identifier hash for the custodied class.

CUSIP integration enables:

Institutional custody integration — Fireblocks, BitGo, Anchorage on Solana can resolve ST22 holdings to their underlying equity for reporting, audit, and corporate-actions purposes.
DTC ownership-chain mapping — DTCC operations can reconcile ST22 records to existing CUSIP-based infrastructure where applicable.
Regulatory reporting — SEC Form 13F, 13G, 13D, beneficial-ownership filings reference the CUSIP and resolve cleanly to ST22 token-account holdings via the on-chain ledger.

// SecurityConfig field set at initialization
pub asset_identifier: [u8; 32], // CUSIP (9 chars) zero-padded to 32 bytes

// Control CV-05 implementation
require_keys_eq!(
    Pubkey::new_from_array(cfg.asset_identifier),
    Pubkey::new_from_array(custody_oracle.asset_identifier_hash()),
    TransferHookError::AssetIdentifierMismatch  // 6009
);

8.4 Issuer Onboarding Sequence

Step

Actor

Output

Reference

Issuer board

Board resolution authorizing Common Class B issuance and tokenization

Issuer Onboarding Guide §3

Issuer Legal

Certificate of Designation filed with Secretary of State

Issuer Onboarding Guide §4

Empire Stock Transfer

KYB; AML screening; issuer onboarded; CUSIP assignment

Empire Stock Transfer Integration Guide §2

Empire Stock Transfer

Custody intake of Common Class B shares; Custody Oracle PDA initialized

Empire Stock Transfer Integration Guide §4

Platform

SecurityConfig PDA created with module = 1, CUSIP, default wallet caps, Reg D / Reg S / Reg CF jurisdictions enabled

Smart Contract Reference §3

Platform

SPL Token-2022 mint created with Transfer Hook extension registered to platform program

Smart Contract Reference §4

Empire Stock Transfer

Investor onboarding (KYC, OFAC/SDN, AML, wallet verification) per investor jurisdiction

Empire Stock Transfer Integration Guide §6

Platform

Token issuance to verified investor wallets; HoldingPeriodAccount PDA created per investor-mint pair

Smart Contract Reference §5

CEDEX

Mint listed on CEDEX with order book and liquidity-pool seeding

CEDEX API Reference §3

8.4.1 Empire Onboarding Detail

Empire Stock Transfer is the sole §17A onboarding authority for Module 1. Empire's onboarding gate performs:

Check

Reference Standard

Identity verification

Customer Identification Program (CIP) per §326 USA PATRIOT Act

KYC / KYB

FinCEN Customer Due Diligence (CDD)

AML

BSA / AML program; Chainalysis KYT integration

OFAC / SDN

Real-time SDN list match (re-verified hourly via SX-10 oracle)

Wallet control

Cryptographic proof (signed challenge)

Jurisdiction

Self-certification + corroborating documentation; sets HoldingPeriodAccount.jurisdiction

Accreditation (Reg D)

§501(a) accredited investor verification per Reg D Rule 501

Reg CF eligibility

JOBS Act §4(a)(6) / Reg CF Rule 100 limits; income/net-worth verification

After Empire approves an investor, Empire signs the wallet-verification attestation that Control IV-15 (UnregisteredWallet) reads on transfer. The attestation is stored in an Empire-controlled PDA accessible to the Transfer Hook.

8.5 Module-Aware Extensions (Module 1)

None applicable. Module 1 mints execute only the 42 core Transfer Hook controls. CB-21 NAV-deviation variant and REG-42 federal-action variant are no-ops for Module 1 mints (the conditional if cfg.module != ... short-circuits at the start of each extension). This makes Module 1 the architectural baseline.

The compute-unit budget for Module 1 transfers is approximately 800,000 CU (770,000 CU for the 42 core controls plus 30,000 CU runtime overhead).

8.6 Investor Lifecycle

8.6.1 Reg D (US Accredited) Path

Step

Action

On-Chain Result

Investor completes Empire onboarding; accreditation verified

Empire MSF entry

Investor purchases tokens via cedex.market in USDC / PYUSD

SecurityConfig debits issuer treasury; HoldingPeriodAccount PDA created with jurisdiction = RegD, holding_period_secs = 15_778_800

Investor holds during 6-month Rule 144 period

Control HP-24 rejects any transfer (TokensLocked, 6024)

After 6 months, is_locked derived as false from current_ts >= purchase_ts + holding_period_secs

Investor can sell on CEDEX with full 42-control enforcement

Investor sells; settlement in USDC / PYUSD

Atomic on Solana (~400 ms)

8.6.2 Reg S (Non-US) Path

Identical to Reg D path except: jurisdiction = RegS, holding_period_secs = 31_536_000 (12 months). Control IV-18 enforces the Reg S US-person check during the compliance period.

8.6.3 Reg CF (US Retail) Path

Reg CF requires a FINRA-registered funding portal partnership. The platform partners with a FINRA-registered funding portal to operationalize Reg CF offerings.

Step

Action

On-Chain Result

Investor enters via funding portal

Funding-portal-side intake

Empire performs Reg CF eligibility check (JOBS Act §4(a)(6) limits)

Empire MSF entry; Reg CF investor flag

Investor purchases via funding portal

HoldingPeriodAccount with jurisdiction = RegCF, holding_period_secs = 31_536_000

Control IV-19 verifies the investor's annual aggregate Reg CF investment does not exceed JOBS Act §4(a)(6) statutory cap

RegCFLimitExceeded (6019) on excess

Investor holds during 12-month period

Control HP-24 rejects transfers

After 12 months, secondary trading available

Standard CEDEX settlement

8.7 Reference Use Case — OTC Microcap Tokenization

A Wyoming-incorporated OTC microcap issuer with $5M market cap, 530 shareholders of record, and OTCID-tier listing engages the platform.

8.7.1 Structuring

Parameter

Value

Issuer

Hypothetical Wyoming Corp

Existing class

Common Class A (5,000,000 shares outstanding)

New class for tokenization

Common Class B (5,000,000 authorized; 1:1 voting and dividend with Class A)

Tokenized share count

5,000,000 ST22 Module 1 tokens

max_wallet_percent

499 bps (4.99%)

Offering exemptions enabled

Reg D, Reg S

holding_period_secs (Reg D)

15,778,800 (6 months)

holding_period_secs (Reg S)

31,536,000 (12 months)

8.7.2 Onboarding Sequence (Concrete)

Board resolution authorizes 5,000,000 Common Class B shares for tokenization.
Certificate of Designation filed with Wyoming Secretary of State; Common Class B rights specified.
Empire Stock Transfer onboards issuer (KYB, AML); CUSIP issued.
Empire takes custody of 5,000,000 Common Class B shares; Custody Oracle PDA initialized.
Platform creates SecurityConfig PDA: module = 1, asset_identifier = CUSIP, max_wallet_percent = 499, circuit_breaker_threshold = 3000, is_paused = false, version = 10.
SPL Token-2022 mint created with Transfer Hook registered to the platform program ID.
5,000,000 ST22 tokens minted to issuer treasury PDA (controlled by issuer 3-of-5 multi-sig).
Investors onboard through Empire; wallets verified; HoldingPeriodAccount PDAs created at first purchase.
Initial offering round: investors purchase ST22 tokens via cedex.market with USDC / PYUSD settlement.
Liquidity-pool seeding occurs at platform initialization (seeded by Groovy STO proceeds + 0.44% fee accrual).
Secondary trading 24/7/365 on cedex.market with full 42-control enforcement.

8.7.3 Operational Outcome

Sub-second finality — typical settlement ~400 ms.
Per-transfer cost — ~$0.00025 (Solana base fee + priority).
Compliance verification per transfer — all 42 controls execute atomically; failure reverts.
Real-time custody attestation — every Solana slot (~400 ms).
Permanent liquidity — Global Pool serves the mint without per-issuer market maker contracts.
Regulatory posture — Category 1 Model B per Release No. 33-11412; Empire §17A custody satisfies Pillar 3; Common Class B 1:1 satisfies Pillar 4; Transfer Hook satisfies Pillar 6; immutable post-deployment satisfies Pillar 7.

8.8 Cross-Module Coordination

Module 1 shares the following with Modules 2 and 3:

Empire Stock Transfer as sole §17A custodian and onboarding authority
Global Unified Liquidity Pool (Layer 4) — single shared pool serves all three modules
CEDEX (Layer 5) as sole legitimate trading venue
Custody / OFAC / AML / TWAP oracles (Layer 6)
Reg D / Reg S / Reg CF offering exemption framework
GENIUS Act stablecoin settlement (USDC / PYUSD)
Layer 9 IDOS compliance intelligence (with Module 1-specific EDGAR pipeline)

Module 1 differs from Modules 2 and 3 in:

No NAV oracle — Module 1 prices via market discovery on CEDEX without NAV-bound enforcement
No federal-action coordination — Module 1 has no analog to the REG-42 federal variant
CUSIP as asset identifier (vs property ID for M2; basin ID for M3)
Common Class B custody (vs SAE equity for M2; BAE equity for M3)

RWA Tokens Whitepaper V10 — Section 8 — Confidential — Groovy Company, Inc.

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