An Introduction to ERC-3643: The Real-World Asset (RWA) Token Standard

TL;DR

• ERC-3643 is an Ethereum-based protocol standard for creating and managing permissioned tokens — digital assets that represent real-world value, and can only be held and transferred by verified participants.
• The ERC-3643 standard can embed identity verification, transfer restrictions, and compliance logic directly into a token, making it ideal for regulated assets like real estate, securities, and private funds.
• ERC-3643’s compliance-first design makes it a powerful tool across multiple industries where regulatory oversight and secure asset transfer are critical: finance, real estate, gaming, art and collectibles, carbon credits, and more.

Blockchain technology is no longer just about cryptocurrencies. As the ecosystem matures, one of its most compelling use cases may be in the tokenization of real-world assets — physical or financial assets that already hold tangible value in the traditional economy like real estate, fine art, luxury goods, or even infrastructure projects. These assets can now be represented as digital tokens, held, and traded on the blockchain, potentially enabling faster transfers, greater transparency, and broader accessibility across borders.

So, how does this work? One way is through ERC-3643, a protocol designed specifically to bring regulated, compliant real-world assets onto the Ethereum blockchain. ERC-3643 provides the tools and standards to tokenize these assets, but unlike most other token standards, allows legal and regulatory requirements to be carried out. These requirements are needed for broader adoption by the traditional financial world, which is governed by strict rules and laws that cannot be abstracted away or ignored.

Keep reading to learn more about the following topics:

• What is ERC-3643?
• What is the difference between ERC-20 and ERC-3643?
• How does the ERC-3643 token standard work?
• ERC-3643 use cases
• How to deploy ERC-3643 tokens
• ERC-3643 tokens for identity verification and access control
• Benefits of using the ERC-3643 standard for tokenized securities

What is ERC-3643?

ERC-3643 is an Ethereum-based protocol standard for creating and managing permissioned tokens — digital assets that represent real-world value, and can only be held and transferred by verified participants. It was specifically designed for regulatory compliance, particularly around identity verification (KYC/AML), investor eligibility, and transfer restrictions.

Originally known as T-REX (Token for Regulated EXchanges), the ERC-3643 standard was spearheaded by Tokeny Solutions, a Luxembourg-based company specializing in compliant tokenization infrastructure. Over time, the standard was formalized through Ethereum Improvement Proposals (EIPs) and was renamed ERC-3643.

Other proposals, like ERC-1400, have also aimed to address the needs of tokenized securities, but ERC-3643 is currently the only one that has been officially accepted as an ERC standard. It is now governed and maintained by the ERC-3643 Association, a collection of industry stakeholders that ensures the standard continues to evolve with regulatory and technological shifts.

What is the difference between ERC-20 and ERC-3643?

ERC-20 is the most widely used token standard on Ethereum, designed for open, fungible assets that can be freely transferred between any wallets. Its simplicity and broad compatibility made it the default standard for everything from utility tokens to stablecoins. However, the ERC-20 standard lacks built-in controls for regulatory compliance.

ERC-3643, by contrast, is built for permissioned tokenization. It can embed identity verification, transfer restrictions, and compliance logic directly into a token, making it ideal for regulated assets like real estate, securities, and private funds. Whereas ERC-20 assumes a trustless environment, ERC-3643 enforces trust and eligibility at the protocol level.

While standards like ERC-20 facilitate token creation and thus the growth of the overall Ethereum ecosystem, they were not designed for regulated environments. ERC-20 tokens afford their holders individual sovereignty over their assets, allowing them to manage, hold them, or transfer them to other pseudonymous users. This pseudonymity makes ERC-20 tokens fundamentally unsuitable for real-world asset tokenization, which requires compliance with legal and regulatory requirements associated with the underlying assets (e.g. verifying identity, applying jurisdictional restrictions, or checking investor credentials).

How does the ERC-3643 token standard work?

ERC-3643 operates through a modular architecture that separates identity management, compliance rules, and token logic into distinct smart contracts. At its core, the standard introduces a claim-based identity system, where each user is linked to an on-chain identity validated by authorized users. This identity determines whether they will be eligible to receive or transfer specific tokens.

Compliance is enforced automatically through transfer restrictions written into the token’s logic. Before any transaction is approved, the system checks if both the sender and receiver meet pre-set conditions, such as jurisdiction or investor status. These checks rely on an on-chain controller contract that governs access in real time, ensuring that each token transfer adheres to legal and regulatory frameworks.

For instance, an investment firm using the ERC-3643 standard could issue security tokens representing shares in a private fund, but only to accredited investors who have passed KYC/AML checks. The firm would embed these eligibility criteria, such as investor accreditation status, residency restrictions, or sanctions list screening, directly into the token’s smart contract. Consequently, only wallets that have been pre-approved by an on-chain identity registry would be able to receive, hold, or transfer these tokens.

ERC-3643 use cases

ERC-3643’s compliance-first design makes it a powerful tool across multiple industries where regulatory oversight and secure asset transfer are critical.

• Finance: Tokenized securities and private equity can be issued and traded more efficiently using ERC-3643, with built-in compliance ensuring that only eligible investors participate, even if the token is traded on a permissionless blockchain.
• Real estate: Real estate ownership requires identity verification and can sometimes be accompanied by jurisdictional and other restrictions. ERC-3643 makes it more feasible to bring the trading of real estate assets, including fractionalized real estate, on-chain.
• Gaming: In-game assets or digital collectibles with real-world value can be restricted to verified players, preventing fraud and enabling cross-border value transfer.
• Art and collectibles: High-value items like fine art or rare collectibles can be tokenized and sold to verified buyers, with provenance and ownership history stored immutably on-chain.
• Carbon credits: Environmental assets like carbon offsets can be issued as permissioned tokens, ensuring legitimacy and avoiding double-counting or fraud.

Beyond the above use cases, ERC-3643 stands out for its security, compliance, and interoperability. For instance, identity-linked access controls can help reduce the risk of illicit activity. Compliance rules can be tailored to meet evolving regulations, while the standard’s compatibility with Ethereum ensures seamless integration with existing infrastructure, including wallets, custodians, and exchanges.

How to deploy ERC-3643 tokens

Step-by-step deployment

Here’s a step-by-step breakdown of deploying an ERC-3643 token, using fictional participants Alice (the issuer) and Bob (the investor):

1. Alice connects to the ERC-3643-compliant infrastructure, such as Tokeny’s platform or using open-source software development kits (SDKs). This includes deploying the identity registry, compliance contract, and token contract.
2. Alice configures the compliance contract to define who can hold or transfer tokens, based on factors like KYC status, geographic restrictions, and investor qualifications.
3. Alice integrates authorized identity validators who can issue claims, for instance that Bob is KYC-verified. These claims are linked to blockchain addresses via the identity registry.
4. Bob undergoes KYC through a registered validator. Once approved, his wallet address is linked to an on-chain identity that satisfies Alice’s compliance requirements.
5. With the infrastructure in place, Alice mints the ERC-3643 tokens and distributes them to verified investors like Bob. Transfers are automatically restricted to eligible, verified participants.
6. If Bob’s status changes, such as if he moves to a restricted jurisdiction, Alice can revoke or update access in real time through the identity registry. 

Best practices

• Use Audited Contracts: Leverage audited implementations or trusted platforms to minimize security risks.
• Choose Reputable Identity Providers: Work with KYC/AML providers who meet local and international regulatory requirements.

• Plan for Governance: Design clear procedures for updating compliance rules and managing access revocations.

• Test Before Mainnet: Always deploy to a testnet first to verify your setup and compliance logic, and to identify security vulnerabilities.

ERC-3643 tokens for identity verification and access control

Unlike traditional token standards, ERC-3643 doesn’t treat identity as an external concern; it makes it a core part of the protocol. Identity verification is handled through an on-chain registry system, where each user is linked to a blockchain-based identity containing validated claims. This setup ensures that every token interaction complies with predefined criteria without revealing holders’ sensitive personal information, and that those holders are qualified to access, hold, and transact the tokens.

A key component of this process is OnchainID, an identity framework developed by Tokeny. OnchainID issues and manages decentralized identities (DIDs) for individuals and institutions. These identities are stored on the blockchain and can store cryptographic claims issued by trusted parties, such as KYC providers or regulators. When a transfer is initiated, ERC-3643 verifies the sender’s and receiver’s OnchainID status in real time.

Benefits of using the ERC-3643 standard for tokenized securities

Asset tokenization represents ownership rights or interests in assets through tokens that live on the blockchain. Tokenization brings clear advantages to illiquid assets and/or assets that typically trade infrequently, such as art or real estate, but can also benefit assets like securities.

In a broad traditional sense, a security is considered as any asset or instrument that entitles the holder to a profit based on the success of an enterprise managed by others. Securities encompass bonds, public stock, private stock, asset-backed securities, and more. Each of these securities suffers from a range of inefficiencies; for instance, in the case of public stock, most trades occur in book entry form, while the stocks themselves are still represented by physical certificates.

Here are some other examples of challenges faced by traditional securities:

• Transaction fees and intermediaries: In traditional markets, many intermediaries are involved in any given transaction, all of whom require payment for their services. While there are still intermediaries and fees involved with tokenized stock, these are not to the same degree as with traditional assets. Additionally, running transactions in tokenized assets requires the payment of fees in the native crypto asset, which can be volatile depending on the asset and market conditions.
• Time delays and access to capital: Given the number of entities involved in traditional securities trades, they are never as simple as peer-to-peer (P2P) transfers on-chain. For instance, the settlement cycle for most traditional securities transactions is T+2, referring to the trade date plus two days. Blockchain facilitates faster execution and settlement times, potentially enabling same day or immediate settlement without the need for an intermediary. Moreover, crypto markets are open 24/7/365, meaning that tokenized securities can unanimously move at any time, whereas some traditional securities can only be traded during set market hours.
• Trust and transparency: Traditional securities holders must rely on intermediaries to carry out specific roles, and trust that they prioritize holders’ interests and requirements. Tokenized assets remove the need for blind trust, given that all transactions are visible by default on most blockchains.

Beyond solving the above inefficiencies, tokenization opens doors to programmable functionality for securities through smart contracts. For instance, in the case of a private stock transfer, which involves complex ownership rights, tokenization could help automate transactions such as dividend payments, or other payments in response to specific events or actions.

A compliant future for tokenized assets

As blockchain technology continues to move toward real-world infrastructure, ERC-3643 stands out as a serious contender for bringing regulated assets on-chain. By embedding identity verification, compliance logic, and transfer restrictions into a token itself, it addresses the shortcomings of earlier standards like ERC-20 — making it viable for industries bound by strict regulatory frameworks.

From real estate to securities, ERC-3643 opens the door to broader adoption by aligning technical innovation with legal requirements. As many regulators begin to revisit their approach to digital asset custody and compliance, standards like ERC-3643 may play a defining role in shaping the next chapter of blockchain-enabled finance.

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