According to Medium, Polymath’s solution is to create a new blockchain ecosystem, specifically designed as a security tokens platform on which regulation-compliant tokens can be built and traded.

Polymath has its own protocol (ST-20) as well as rules that require investors to verify their identities (ensuring KYC/AML compliance) and status as accredited investors before taking part in a Security Token Offering or “STO”. Polymath also functions as a network where investors can post their ideas for new security tokens, and development teams can bid to win the contract to build them.

Source: https://medium.com/faast/is-polymath-poly-your-ticket-to-the-10-trillion-security-token-revolution-ddab56926874