We have broken down further barriers to entry for Tinlake, and you can now onboard to invest in a Tinlake pool in just a few minutes. Tinlake investors need to go through a KYC (“Know Your Customer”) check to be compliant with US securities regulations. To make the effort as minimal as possible, Tinlake has now fully integrated Securitize.io and Docusign for an automated onboarding process. This post will give you an overview on how our new investor onboarding flow works for your first or next investment in Tinlake.
Before onboarding — DYOR
Of course the first step is to assess the pools and decide which one you want to invest in. You can learn more about this in our previous post on how to DYOR before investing, or this summary of how to size up a pool.
The new onboarding process
Once you have selected your favorite pool, connect your wallet and click on `Invest` on the Pool Overview tab to get started. With the new flow, onboarding is done within three steps for first time investors:
1) Link your Securitize account
First you need to link your Securitize account to your connected Ethereum address. If you don’t have a Securitize account yet, you can create one in this step. Once this is done, you will be redirected to Tinlake to continue onboarding.
2) Complete KYC through Securitize
In the next step you will be forwarded again to Securitize to submit your KYC information so Securitize can verify your identity (and if you are an US resident your investor accreditation status).
In order to complete KYC, Securitize will usually ask you to provide:
- A government issued photo ID or passport
- A selfie with this ID (optional)
- Proof of address, e.g. utility bill, phone bill or council tax bill, not older than 3 months
Securitize’s automated KYC process is usually carried out within one hour. If a manual review is required it may take 24h-48h. Checking the accreditation status for US investors may also take longer.
3) Sign Subscription Agreement
While Securitize is verifying your KYC, you can already return to Tinlake to continue with the final step and sign the subscription agreement with the pool’s issuer.
Once you click on `Sign the Subscription Agreement`, Tinlake will open the documents in Docusign for you. Please read the subscription agreement and attached executive summary carefully. Then, fill in your data and sign digitally. Depending on your country of tax residency you may also be required to fill out additional tax forms (e.g. W8-BEN).
Your completed and signed document will automatically be shared with the pool’s issuer. After the Issuer has counter-signed and your KYC has cleared your ETH address will be automatically whitelisted for investment and you are ready to go. This will also be displayed in Tinlake.
Repeating investors can skip KYC
Once you are KYCed by Securitize and you can re-use your SecuritizeID for all future Tinlake investments across the different pools. There is no need to go through KYC again. Just click on ‘Invest` in the respective pool when connected with your investor wallet and you will be redirected to sign the pool’s subscription agreement right away. Again, you will be automatically whitelisted once the issuer countersigns the document.
Why onboarding and KYC for a DeFi protocol?
While we have done our best to make the onboarding experience as smooth as possible, experienced DeFi users may wonder why it might be worth bothering going through KYC and signing legal documents at all. The reason is that Tinlake pools are backed by real-world assets such as invoices, residential real-estate loans or trade receivables. This makes DROP a stable investment with attractive yields but financing those assets on Tinlake requires a legal structure that gives the investors a legal claim on the assets. To ensure this recourse, each Asset Originator sets up a legal structure commonly used in the traditional financial system — a “Special Purpose Vehicle” (“SPV”). The underlying legal framework also makes Tinlake’s pools private placements from a regulatory perspective. This comes with certain regulatory requirements, e.g. all investors must clear standard KYC checks and sign a subscription agreement with the pool’s issuer.
We will continue to improve the onboarding and investment experience for Tinlake investors. This includes UI/UX improvements in the onboarding flow but also working on the underlying legal framework. The operational savings for the pool issuers through a more streamlined onboarding process have already allowed to halve the minimum investment amount per pool from $10k to $5k. We strive to further lower minimum investment amounts to come one step-closer to our vision of an open, decentralized and permissionless financing platform that improves the access to competitive cost of capital for SMEs and provides all DeFi investors with a stable source of yield uncorrelated from volatile crypto assets.
A Dive into Tinlake’s New Investor Onboarding Flow was originally published in Centrifuge on Medium, where people are continuing the conversation by highlighting and responding to this story.