What Is the Significance of the ‘Transfer’ Function in an ERC-20 Tokenized Security in a Regulated Environment?

In a regulated environment, the standard ERC-20 'transfer' function is often modified or wrapped to include compliance checks. Before execution, the modified function calls a compliance module to verify the sender and receiver are whitelisted, accredited, and within jurisdictional limits.

This ensures all secondary market transfers adhere to securities laws, unlike a basic, permissionless ERC-20 transfer.