🎯 Role & Responsibilities
🏦 EMPIRE STOCK TRANSFER & CUSTODY FAQ
Regulated Custody for SEC Category 1 Tokenized Securities
✅ SEC CATEGORY 1 COMPLIANT | Issuer-Sponsored Tokenized Securities pursuant to SEC Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets Joint Statement dated January 28, 2026
🏦 EMPIRE STOCK TRANSFER ROLE
Q: What is Empire Stock Transfer's role in the OTCM Protocol ecosystem?
A: Empire Stock Transfer serves as the SEC-registered transfer agent and qualified custodian for all Series "M" Preferred Shares backing ST22 Tokenized Securities. This role is essential for SEC Category 1 compliance.
🛡️ Custody Responsibilities
| Responsibility |
Description |
| 🔒 Qualified Custody |
Hold shares in segregated, restricted custody accounts |
| ✅ Deposit Verification |
Verify share deposits before ST22 token minting |
| 🔐 Oracle Integration |
Provide real-time cryptographic verification to Transfer Hooks |
| 📋 Regulatory Compliance |
Maintain SEC transfer agent compliance |
| 🎖️ Golden Medallion |
Provide Golden Medallion Signature Guarantee for transfers |
| 📊 CUSIP Coordination |
Coordinate CUSIP assignment for clear ownership chain |
| 🔄 Conversion Processing |
Process protective conversions when triggered |
Category 1 Requirement Fulfillment
| Category 1 Requirement |
Empire Stock Transfer Role |
| 🏦 Regulated Custody |
SEC-registered transfer agent holding all backing shares |
| 💎 True Equity Backing |
Verifies and maintains 1:1 share-to-token ratio |
| 🔗 Clear Ownership Chain |
Golden Medallion Guarantee + CUSIP coordination |
| 🛡️ Investor Protection |
Real-time custody verification via oracle system |
Q: Is Empire Stock Transfer affiliated with OTCM Protocol, Inc.?
A: No. Empire Stock Transfer and OTCM Protocol, Inc. are completely independent entities:
| Factor |
Status |
| 🏛️ Empire Stock Transfer |
Independent, SEC-registered transfer agent |
| 🏢 OTCM Protocol, Inc. |
Wyoming Digital Asset Corporation |
| 🤝 Relationship |
Arms-length commercial service agreement |
| ⚖️ Regulatory Oversight |
Separate regulatory supervision |
| 🔍 Independence |
No ownership, control, or financial interest overlap |
| 📋 Conflicts |
Legally prohibited conflicts of interest |
Why Independence Matters for Category 1
| Benefit |
Explanation |
| 🛡️ Investor Protection |
Custodian cannot be influenced by protocol interests |
| ⚖️ Regulatory Compliance |
SEC requires independent qualified custody |
| 🔍 Audit Trail |
Clear separation for regulatory examination |
| 🏦 Institutional Trust |
Institutions require independent custody |
Q: What are Empire Stock Transfer's qualifications?
A: Empire Stock Transfer is fully qualified to serve as Category 1 custodian:
| Qualification |
Status |
| 📜 SEC Registration |
SEC-registered transfer agent |
| 🏦 Transfer Agent |
Licensed transfer agent services |
| 🎖️ Medallion Program |
STAMP, SEMP, and MSP participant |
| 📊 CUSIP Services |
Authorized CUSIP agent |
| 🔐 Cybersecurity |
SOC 2 Type II compliant |
| 📋 Experience |
[Years] of transfer agent experience |
| 💼 Clients |
Serves [number] issuers |
🔒 CUSTODY & SECURITY
Q: How are the Series "M" shares held?
A: Shares are held in segregated, restricted custody accounts with multiple layers of protection:
// Custody account specifications
interface CustodyAccount {
// Account Structure 📛
naming: "OTCM Protocol - [SYMBOL] Series 'M' Reserve";
type: "Segregated Custody Account";
status: "Permanently Restricted";
// Category 1 Compliance 🏛️
category1: {
regulatedCustody: true, // SEC-registered custodian
trueEquityBacking: true, // Real shares, not derivatives
clearOwnershipChain: true, // CUSIP + Golden Medallion
investorProtection: true // Oracle verification
};
// Security Features 🛡️
security: {
segregation: "Completely separate from issuer accounts",
restrictions: "No trading, transfer, or withdrawal permitted",
permanentLock: "Irrevocable custody deposit",
legends: "Restrictive legends on share certificates",
goldenMedallion: "Golden Medallion Guarantee required for any movement"
};
// Access Controls 🚫
access: {
issuerAccess: false, // Issuer CANNOT access
otcmProtocolAccess: false, // OTCM Protocol CANNOT access
tradingEnabled: false, // No trading permitted
withdrawalRights: "Protective conversion only",
modification: "Permanently prohibited"
};
// Verification 🔐
verification: {
oracleIntegration: true, // Real-time verification
frequency: "Every ~400ms", // Continuous monitoring
cryptographicProof: true, // Cryptographic attestation
auditTrail: "Complete and immutable"
};
}
Physical vs. Book-Entry Holdings
| Holding Type |
Status |
Security |
| 📜 Physical Certificates |
Held in secure vault |
Restrictive legends applied |
| 💻 Book-Entry |
Electronic records |
System-enforced restrictions |
| 🔐 Both |
Equivalent protection |
Same custody rules apply |
Q: Can companies ever access their deposited shares?
A: Absolutely not. Empire Stock Transfer will automatically reject any issuer attempts to:
| Prohibited Action |
Enforcement |
| 🚫 Withdraw shares |
System-level blocking + legal prohibition |
| 🔄 Transfer shares |
Requires Golden Medallion (issuer cannot obtain) |
| 💰 Redeem tokens for shares |
Issuer wallets permanently blacklisted |
| 🔍 Access custody account |
No login credentials, no physical access |
| 📝 Modify share terms |
Cannot alter Certificate of Designation |
| 📊 Request share count changes |
1:1 ratio permanently locked |
Multi-Layer Enforcement
┌─────────────────────────────────────────────────────────────┐
│ CUSTODY PROTECTION LAYERS │
├─────────────────────────────────────────────────────────────┤
│ │
│ Layer 1: LEGAL AGREEMENTS │
│ ├── Tripartite Agreement prohibits access │
│ ├── Severe penalty clauses │
│ └── Fiduciary duty to token holders │
│ │
│ Layer 2: EMPIRE STOCK TRANSFER SYSTEMS │
│ ├── Account flagged as "PERMANENT CUSTODY" │
│ ├── No issuer access credentials exist │
│ ├── Golden Medallion required (issuer cannot obtain) │
│ └── Staff trained to reject all issuer requests │
│ │
│ Layer 3: SMART CONTRACT ENFORCEMENT │
│ ├── Issuer wallets blacklisted for redemption │
│ ├── Transfer Hooks verify custody on every transaction │
│ └── Cannot mint tokens without verified custody │
│ │
│ Layer 4: REGULATORY OVERSIGHT │
│ ├── SEC supervision of transfer agent │
│ ├── Category 1 compliance requirements │
│ └── Audit trail for regulatory examination │
│ │
└─────────────────────────────────────────────────────────────┘
Q: What happens to the shares in different scenarios?
A: The shares remain in custody under all normal circumstances. Only protective conversion can move them:
| Scenario |
What Happens to Shares |
| 🏢 Normal Operations |
Remain in custody indefinitely |
| 📈 Token Price Increases |
Remain in custody (no change) |
| 📉 Token Price Decreases |
Remain in custody (no change) |
| 💰 Issuer Wants Shares Back |
Rejected — shares remain in custody |
| 🔄 Issuer Merger/Acquisition |
Protective conversion may trigger |
| 💸 Issuer Bankruptcy |
Protective conversion triggers → common stock |
| 🏛️ SEC Enforcement |
Protective conversion triggers → common stock |
| ⚖️ Criminal Indictment |
Protective conversion triggers → common stock |
| 🚫 OTCM Protocol Failure |
Shares remain safe; conversion rights preserved |
Q: What is the Golden Medallion Signature Guarantee?
A: The Golden Medallion Guarantee is a critical security feature for Category 1 compliance:
What It Is
| Aspect |
Description |
| 🎖️ Definition |
Signature guarantee from authorized financial institution |
| 📜 Programs |
STAMP, SEMP, or MSP medallion programs |
| 🏦 Issuers |
Banks, broker-dealers, credit unions |
| 🔐 Purpose |
Authenticates share transfers and prevents fraud |
Role in Category 1 Compliance
| Function |
How It Supports Category 1 |
| 🔗 Clear Ownership Chain |
Authenticates every transfer in custody chain |
| 🛡️ Investor Protection |
Prevents unauthorized transfers |
| 📋 Audit Trail |
Creates verifiable record of share movements |
| 🏦 Institutional Standard |
Required by SEC-registered transfer agents |
Why Issuers Cannot Circumvent Custody
| Protection |
Explanation |
| 🚫 Cannot Obtain Medallion |
Issuers cannot get Medallion for their own custodied shares |
| 🏦 Bank Verification |
Medallion issuers verify identity and authority |
| 📋 Liability |
Medallion issuer liable for unauthorized transfers |
| 🔒 System Design |
Designed specifically to prevent unauthorized access |
🔍 VERIFICATION & ORACLE SYSTEM
Q: How does the verification system work?
A: Empire Stock Transfer operates a Reserve Oracle System that provides real-time cryptographic verification to OTCM Protocol's Transfer Hooks:
Oracle Architecture
┌─────────────────────────────────────────────────────────────┐
│ CUSTODY ORACLE SYSTEM │
├─────────────────────────────────────────────────────────────┤
│ │
│ ┌─────────────────┐ │
│ │ EMPIRE STOCK │ │
│ │ TRANSFER │ │
│ │ ─────────────── │ │
│ │ • Share Count │ │
│ │ • Custody Status│ │
│ │ • CUSIP Verify │ │
│ │ • Trigger Watch │ │
│ └────────┬────────┘ │
│ │ │
│ │ Cryptographic Attestation │
│ │ (Every ~400ms) │
│ ▼ │
│ ┌─────────────────┐ │
│ │ ORACLE BRIDGE │ │
│ │ ─────────────── │ │
│ │ • Encrypt Data │ │
│ │ • Sign Message │ │
│ │ • Timestamp │ │
│ │ • Transmit │ │
│ └────────┬────────┘ │
│ │ │
│ │ Signed Verification │
│ ▼ │
│ ┌─────────────────┐ │
│ │ TRANSFER HOOK │ │
│ │ ─────────────── │ │
│ │ • Verify Sig │ │
│ │ • Check 1:1 │ │
│ │ • Block if Fail │ │
│ │ • Allow if Pass │ │
│ └─────────────────┘ │
│ │
└─────────────────────────────────────────────────────────────┘
Verification Process
| Step |
Action |
Frequency |
| 1️⃣ |
Empire database confirms exact share count (1,000,000,000) |
Continuous |
| 2️⃣ |
Oracle bridge creates cryptographic attestation |
Every ~400ms |
| 3️⃣ |
Signed message transmitted to Solana network |
Real-time |
| 4️⃣ |
Transfer Hook verifies signature and data |
Per transaction |
| 5️⃣ |
Transaction approved ONLY if 1:1 ratio confirmed |
Per transaction |
What Gets Verified
| Verification |
Description |
Failure Action |
| 📊 Share Count |
Exactly 1,000,000,000 shares in custody |
Block all transactions |
| 🔐 Custody Status |
Account in "PERMANENT CUSTODY" status |
Block all transactions |
| 📋 CUSIP Match |
CUSIP matches registered Series M |
Block all transactions |
| ⚠️ Trigger Events |
No protective conversion triggers active |
Initiate conversion |
| 🏦 Empire Status |
Empire Stock Transfer operational |
Block all transactions |
A: Empire Stock Transfer shares only essential verification data required for Category 1 compliance:
✅ Data Shared with OTCM Protocol
| Data Type |
Purpose |
Sensitivity |
| ✅ Confirmation of Share Deposit |
Verify custody established |
Low |
| 📊 Current Share Count |
Verify 1:1 backing ratio |
Low |
| 🔍 Series Type Verification |
Confirm Series M designation |
Low |
| 📋 CUSIP Verification |
Clear ownership chain |
Low |
| 🔄 Conversion Ratio Status |
Track any conversions |
Low |
| ⚠️ Trigger Event Monitoring |
Protective conversion alerts |
Medium |
| 🏦 Custody Account Status |
Operational verification |
Low |
🚫 Data NEVER Shared
| Data Type |
Reason |
Protection |
| 🔒 Confidential Company Information |
Privacy laws |
Encrypted at rest |
| 💰 Issuer Financial Details |
Business confidentiality |
Not collected |
| 👥 Shareholder Personal Information |
Privacy regulations |
Segregated systems |
| 📋 Private Corporate Records |
Attorney-client privilege |
Not retained |
| 🏦 Other Client Information |
Fiduciary duty |
Complete segregation |
Data Security Standards
| Standard |
Implementation |
| 🔐 Encryption |
AES-256 encryption in transit and at rest |
| 🛡️ Access Control |
Role-based access, multi-factor authentication |
| 📋 Audit Logging |
Complete audit trail of all data access |
| 🏛️ Compliance |
SOC 2 Type II certified |
| 🔍 Monitoring |
24/7 security monitoring |
Q: What happens if the oracle system fails?
A: Multiple safeguards protect against oracle failure:
Failsafe Mechanisms
| Mechanism |
Action |
| 🔴 Circuit Breaker |
Trading automatically halts if oracle offline |
| ⏰ Stale Data Detection |
Transactions blocked if verification >5 minutes old |
| 🔄 Redundant Oracles |
Multiple oracle nodes for failover |
| 📋 Manual Verification |
Human verification available for critical operations |
| 🛡️ Conservative Default |
System defaults to BLOCK if any uncertainty |
Oracle Failure Scenarios
| Scenario |
System Response |
| 📡 Network Outage |
Trading halted until connection restored |
| 💻 Oracle Node Failure |
Failover to backup nodes |
| 🔐 Signature Invalid |
Transaction blocked, security alert |
| ⏰ Stale Data |
Trading halted, fresh verification required |
| 🏦 Empire System Down |
Trading halted until Empire operational |
🛡️ Key Principle: The system is designed to fail safe—any uncertainty results in blocked transactions, never false approvals.
🔄 PROTECTIVE CONVERSION
Q: What is protective conversion and how does Empire Stock Transfer handle it?
A: Protective conversion automatically converts Series "M" Preferred Shares to common stock when adverse events occur:
Trigger Events
| Trigger |
Detection |
Action |
| 💸 Bankruptcy Filing |
Court filing monitoring |
Conversion initiated |
| 🏛️ SEC Enforcement |
Public enforcement action |
Conversion initiated |
| ⚖️ Criminal Indictment |
Public records monitoring |
Conversion initiated |
| 🔄 Adverse Merger |
Corporate action notification |
Conversion initiated |
| 🏢 Dissolution |
State filing monitoring |
Conversion initiated |
| 🚨 Material Adverse Event |
Per Certificate of Designation |
Conversion initiated |
Conversion Process
┌─────────────────────────────────────────────────────────────┐
│ PROTECTIVE CONVERSION PROCESS │
├─────────────────────────────────────────────────────────────┤
│ │
│ Step 1: TRIGGER DETECTION │
│ ├── Oracle monitors for trigger events │
│ ├── Event detected and verified │
│ └── Alert sent to Empire Stock Transfer │
│ │
│ Step 2: VERIFICATION │
│ ├── Empire confirms trigger event validity │
│ ├── Legal review if required │
│ └── Conversion authorized │
│ │
│ Step 3: SHARE CONVERSION │
│ ├── Series M shares converted to common stock │
│ ├── Per conversion ratio in Certificate of Designation │
│ └── New common shares recorded │
│ │
│ Step 4: TOKEN HOLDER NOTIFICATION │
│ ├── On-chain event emitted │
│ ├── Token holders notified of conversion │
│ └── Claim process initiated │
│ │
│ Step 5: CLAIM PROCESSING │
│ ├── Token holders submit conversion claims │
│ ├── Empire verifies token ownership │
│ └── Common shares issued to verified holders │
│ │
└─────────────────────────────────────────────────────────────┘
What Token Holders Receive
| Before Conversion |
After Conversion |
| ST22 tokens representing Series M |
Common stock in issuer company |
| Trade on CEDEX |
Trade per applicable securities laws |
| Rights per Certificate of Designation |
Standard common shareholder rights |
| Empire custody (indirect) |
Direct registration or broker custody |
⚠️ Important: Conversion to common stock does NOT guarantee value. In bankruptcy, common stock may have zero value. Protective conversion ensures token holders have the same rights as other shareholders.
📋 COMPLIANCE & AUDIT
Q: How does Empire Stock Transfer maintain compliance?
A: Empire Stock Transfer maintains comprehensive compliance for Category 1 requirements:
Regulatory Compliance
| Requirement |
Implementation |
| 📜 SEC Registration |
Current SEC transfer agent registration |
| 🏦 Examination |
Subject to SEC examination |
| 📋 Record Keeping |
Maintain records per SEC Rule 17Ad |
| 🔐 Cybersecurity |
SOC 2 Type II compliance |
| 📊 Reporting |
Annual compliance reporting |
OTCM Protocol-Specific Compliance
| Requirement |
Implementation |
| 🏦 Regulated Custody |
Category 1 qualified custody |
| 💎 1:1 Backing |
Continuous verification |
| 🔗 Ownership Chain |
CUSIP + Golden Medallion |
| 🛡️ Investor Protection |
Oracle integration |
| 📋 Audit Trail |
Complete transaction history |
Audit Capabilities
| Audit Type |
Frequency |
Scope |
| 🔍 Internal Audit |
Quarterly |
Operational compliance |
| 📊 External Audit |
Annual |
SOC 2 Type II |
| 🏛️ Regulatory Exam |
As scheduled |
SEC examination |
| 💻 System Audit |
Continuous |
Oracle and security |
Q: What records does Empire Stock Transfer maintain?
A: Comprehensive records for regulatory compliance and audit:
| Record Type |
Retention |
Purpose |
| 📜 Custody Agreements |
Permanent |
Legal documentation |
| 📊 Share Balances |
Permanent |
1:1 verification |
| 🔄 Transaction History |
7 years minimum |
Audit trail |
| 🔐 Oracle Logs |
7 years |
Verification records |
| 📋 Correspondence |
5 years |
Communication records |
| ⚠️ Trigger Events |
Permanent |
Conversion documentation |
| 🎖️ Medallion Records |
Permanent |
Transfer authentication |
❓ ADDITIONAL QUESTIONS
Q: What if Empire Stock Transfer goes out of business?
A: Multiple protections ensure continuity:
| Protection |
Description |
| 📜 SEC Oversight |
SEC supervises transfer agent transitions |
| 🔄 Successor Custodian |
Tripartite Agreement specifies successor process |
| 📋 Record Transfer |
All records transferred to successor |
| 🛡️ Share Protection |
Shares cannot be lost—must transfer to qualified successor |
| ⚖️ Legal Framework |
Transfer agent regulations ensure continuity |
Q: Can token holders contact Empire Stock Transfer directly?
A: For most inquiries, token holders should contact OTCM Protocol. However:
Q: How does Empire Stock Transfer coordinate with OTCM Protocol for new tokenizations?
A: Structured onboarding process:
| Step |
Empire Role |
OTCM Protocol Role |
| 1️⃣ |
Open custody account |
Complete issuer KYB |
| 2️⃣ |
Verify share certificates |
Draft Certificate of Designation |
| 3️⃣ |
Apply restrictive legends |
State filing coordination |
| 4️⃣ |
Confirm deposit |
Mint ST22 tokens |
| 5️⃣ |
Activate oracle feed |
Enable Transfer Hooks |
| 6️⃣ |
Ongoing verification |
Ongoing compliance |
| Field |
Value |
| 📄 Document Version |
3.0 |
| 📅 Last Updated |
January 2026 |
| 📍 Jurisdiction |
United States |
| 🏛️ Regulatory Framework |
SEC Category 1 (Issuer-Sponsored Tokenized Securities) |
| 🏦 Custodian |
Empire Stock Transfer Inc. (SEC-registered transfer agent) |
⚠️ Disclaimer: This FAQ provides general information about custody arrangements for OTCM Protocol's Category 1 tokenized securities. It does not constitute legal or investment advice. Consult qualified professionals for specific guidance.
© 2026 OTCM Protocol, Inc. | All Rights Reserved
Empire Stock Transfer Inc. is an independent, SEC-registered transfer agent providing qualified custody services for ST22 Tokenized Securities pursuant to SEC Category 1 framework. Empire Stock Transfer is not affiliated with OTCM Protocol, Inc.
