Smart Contract Applications Across FinTech BFC Practice Questions (Page 7)

Questions 31–35

1. 31application · medium

   A bank wants to use smart contracts for syndicated loans, but its existing loan management system uses a proprietary database and does not support blockchain APIs. What is the most practical way to integrate the two systems?

   • AManually copy data from the blockchain explorer to the loan system after each loan event.
   • BUse a third-party middleware that only supports ISO 20022 messages, even if the loan system does not use that standard.
   • CMigrate the loan management system to a blockchain-based platform to achieve native integration.
   • DDevelop a custom API gateway that listens to smart contract events and updates the loan management system via its existing database interface.
   Reveal Solution Discussion Select an answer first
2. 32foundation · easy

   What is a common security risk associated with smart contract code?

   • AThe blockchain being too fast for the contract to execute
   • BThe code being too simple to perform complex financial functions
   • CVulnerabilities such as reentrancy attacks that can be exploited to drain funds
   • DThe contract being unable to store data on-chain
   Reveal Solution Discussion Select an answer first
4. 33application · medium

   A bank is deploying a smart contract for cross-border payments and must comply with anti-money laundering (AML) regulations that require verifying the identity of parties before a transaction is executed. The bank also needs to integrate with its existing core banking system. Which approach best meets these requirements?

   • AUse a smart contract that only records the transaction after the bank manually verifies identity off-chain, with no automated link to the contract.
   • BCreate a smart contract that executes payments without any identity checks, relying on the pseudonymity of the blockchain to satisfy AML requirements.
   • CDesign the smart contract to call an external KYC/AML verification service before executing the payment, and integrate with the bank's existing customer database.
   • DStore all customer identity data directly on the blockchain in the smart contract to ensure transparency and compliance.
   Reveal Solution Discussion Select an answer first
5. 34application · medium

   A fintech startup wants to issue security tokens that comply with securities regulations. The smart contract must ensure that only accredited investors can purchase tokens and that resale restrictions are enforced. Which approach best achieves this?

   • ACreate a token that can only be purchased through a centralized exchange that performs KYC, but allow peer-to-peer transfers afterward.
   • BRely on a separate off-chain registry to track investor status and manually approve each transfer.
   • CUse a public token contract with no transfer restrictions, assuming that investors will self-certify their status.
   • DEmbed KYC/AML verification results and accredited-investor status into the token contract, and restrict transfers to verified addresses.
   Reveal Solution Discussion Select an answer first
6. 35expert · hard

   A real estate firm is tokenizing a commercial property. The firm must comply with securities regulations that restrict the resale of tokens to qualified investors. The firm also wants to provide liquidity to token holders. Which smart contract design best balances regulatory compliance and liquidity?

   • AAllow unrestricted trading on a public decentralized exchange to maximize liquidity.
   • BImplement a transfer restriction mechanism that only allows token transfers to addresses that have passed a qualified-investor verification, and integrate with a regulated security token exchange.
   • CRestrict all transfers to the initial purchasers and do not allow any secondary trading.
   • DUse a smart contract that only records ownership but does not enforce any transfer restrictions.
   Reveal Solution Discussion Select an answer first