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FRM Part II · FRM Exam Part II · Tokenization and Financial Market Inefficiencies

A regulator contrasts a permissioned distributed ledger operated by a consortium of banks with a permissionless public ledger. Which feature is more characteristic of the permissioned ledger?

A permissioned ledger restricts validation and access to vetted participants, which supports KYC, compliance and clear legal accountability. Permissionless ledgers allow anyone to validate without identification and typically lack a formal governance body, so those features describe the public design, not the consortium one.

  1. AAnyone can validate transactions without identification
  2. BParticipants are vetted and access to validation is restricted, which supports compliance with KYC and legal accountabilityCorrect
  3. CThe ledger has no governance body
  4. DTransaction finality is always probabilistic

Explanation

Permissioned ledgers limit participation to identified, approved entities, easing KYC, anti-money-laundering controls, and legal accountability. Open validation, absence of governance, and probabilistic finality are associated with permissionless designs.

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