Target Groups:
Financial actors.
Affiliation:
Tokeny
Open Source and Standards:
Yes

Abstract

The ERC-3643 is an open-source suite of smart contracts that enables the issuance, management, and transfer of permissioned tokens. $28 billion worth of assets have been tokenized through ERC-3643 as of December 2023.

Main Author:
Joachim Lebrun
< joachim@tokeny.com >
Authors:
Tony malghem, Kevin Thizy, Luc Falempin, Adam Boudjemaa
Use Case URL:
https://eips.ethereum.org/EIPS/eip-3643

Value Proposition

The ERC-3643 standard provides a comprehensive framework for managing the lifecycle of security tokens, from issuance to transfers between eligible investors, while enforcing compliance rules at every stage. The standard also supports additional features such as token pausing and freezing, which can be used to manage the token in response to regulatory requirements or changes in the status of the token or its holders. Moreover, the standard is designed to work in conjunction with an on-chain identity system, allowing for the validation of the identities and credentials of investors through signed attestations issued by trusted claim issuers. This ensures compliance with legal and regulatory requirements for the trading of security tokens.

Identity Management

Based on the ERC-734 and ER-735 standards, an ONCHAINID contract stores keys and claims related to a specific identity, and encompasses all essential functions associated with these elements. An ONCHAINID contract is not tied to a specific token, meaning each user needs to deploy it only once. The Identity Registry smart contract executes the Eligibility Verification System (EVS) and is linked to the Identity Registry Storage contract, which houses a dynamic “whitelist” of identities.

Data Provenance

An ONCHAINID contract is also deployed and associated with the token smart contract to represent the identity of the financial asset itself. The claims provide information about the asset and all pertinent corporate actions and details regarding the security. Essentially, it serves as an onchain “golden copy” of the asset, and can be augmented with any relevant claim throughout the token’s life cycle.

Token and asset creation and exchange

ERC 3643 standard extends theERC-20 standard with additional functions to ensure full regulatory compliance in security token transactions. The transfer and transferFrom functions are designed conditionally, executing a transfer solely upon the approval of the decentralized validator (EVS + Compliance). It means that transfers can only be triggered when both investor rules (via EVS) and offering or additional rules (via Compliance) are met. This ensures that the permissioned tokens can only be transferred to verified parties, thereby preventing the tokens from landing in the wallets or ONCHAINIDs of ineligible or unauthorized investors.