ERC-3643 Tokenized RWAs

Components

• Permissioned token contract (ERC-3643) exposes an ERC-20 interface and applies identity and compliance checks to investor-initiated transfers.
• Token owner configures token metadata, registries, compliance settings, and the agents responsible for operational administration.
• Token agents perform operational controls such as minting, burning, recovery, freezing, and forced transfer, subject to the deployed implementation and governance policy.
• On-chain identity contract per participant stores claims (KYC, accreditation, jurisdiction) and exposes verification endpoints.
• Identity registry maps wallet addresses to identity contracts and gates who is eligible to hold the token.
• Compliance module suite is a pluggable rules engine that evaluates per-transfer restrictions (caps, lockups, eligibility classes).
• Claim issuers sign claims written into identity contracts and are represented on chain by claim-issuer contracts; the Trusted Issuers Registry lists which issuers the token trusts for which claim topics.

Protocol

1. user Create an on-chain identity and collect signed claims from trusted issuers (KYC, accreditation, jurisdiction).
2. operator Deploy the permissioned token with a specific compliance ruleset and transfer restrictions.
3. operator Populate the identity registry with eligible participants and their identity contracts.
4. user Initiate an investor transfer to a recipient address.
5. contract For the investor-initiated transfer path, validate the relevant identities and compliance rules; revert on any failure.
6. contract Execute the balance change and emit transfer and compliance events. Issuance, recovery, freezing, and forced-transfer paths use their own role and eligibility checks.
7. regulator Query the on-chain compliance history to reconcile against regulatory filings.

Transfer-path note

ERC-3643 distinguishes investor-initiated transfers from administrative actions. The canonical specification states that mint and forcedTransfer can bypass compliance rules while still requiring a verified recipient. Implementations can differ: the current ERC-3643 reference contract invokes canTransfer for mint but not for forcedTransfer. Integrators should verify the exact deployed version before treating the token as enforcing one uniform rule on every movement of value.

Confidentiality boundary

This pattern treats transaction-level confidentiality as out of scope. For designs that add it, the boundary runs between two layers:

• The policy layer can be reused. Claim topics, the Trusted Issuers Registry and ONCHAINID claims define rules without requiring any particular data to be public. ONCHAINID claims already carry signature and data byte fields that can hold a zero-knowledge proof, which hides a claim's content but not its existence.
• The execution layer cannot be made confidential without interface changes:
  • balanceOf and Transfer events, kept for ERC-20 compatibility
  • the identity registry's identity(address) and isVerified(address), which publish the wallet-to-identity mapping
  • the compliance contract's canTransfer(from, to, amount), which takes both parties and the amount in the clear

A confidential design therefore reuses the policy layer and replaces some or all of the execution layer. Two directions exist:

• Encrypted balances, registry kept. Amounts and balances become FHE ciphertexts, while the identity registry and compliance rules stay as they are. For example, Zama's confidentiality layer for the T-REX Ledger (which follows the ERC-3643 standard) takes this route; it hides amounts, not who transacts (see Zama).
• Notes, registry replaced. Shielded notes and a membership proof also replace the identity registry, which additionally hides who transacts within the anonymity set (see Private Client Authentication for Institutional EOAs).

Guarantees & threat model

Guarantees:

• Every investor-initiated transfer or transferFrom path passes identity verification and compliance checks before execution.
• Transfer rules can enforce KYC/AML status, investor accreditation, and jurisdictional restrictions automatically, subject to the configured claim issuers and compliance modules.
• Administrative actions such as freezes and forced transfers are observable on chain, but their authority and policy constraints must be documented separately.
• Interface compatibility with ERC-20 tooling. Transfer restrictions sit outside the ERC-20 interface, but callers can pre-check them through the identity registry's isVerified and the compliance contract's canTransfer.

Threat model:

• Trusted claim issuers: compromised issuers can mint false claims, enabling ineligible holders to pass compliance checks.
• Token-agent key compromise is catastrophic: the attacker can freeze, force-transfer, or seize any balance.
• On-chain identity links all token activity to KYC data; a privacy leak at the claim issuer side cascades to on-chain positions.
• Out of scope: transaction-level confidentiality. Amounts, positions, and counterparties remain visible on chain.

Trade-offs

• More complex than plain ERC-20 tokens; requires identity infrastructure and claim issuer onboarding.
• Additional compliance checks on every transfer raise gas costs.
• Not suitable for permissionless DeFi composition. Many protocols will reject permissioned tokens.
• Compliance rules must be maintained and updated as regulations evolve, which requires ongoing governance.
• CMTAT covers the same intent through a rule-engine and allowlist model instead of an identity registry with claim issuers; it is blockchain-agnostic (EVM, Tezos, Solana) and has an existing privacy-preserving implementation in Noir for Aztec, relevant where transaction-level confidentiality is a goal.

Example

An issuer tokenizes a bond as a permissioned token with investor accreditation requirements. Qualified institutional investors complete KYC and register identity contracts. Bond tokens are distributed to verified investors through the identity registry. Secondary trading is restricted by the compliance module to other qualified investors meeting the issuance rules. All transfers enforce regulatory requirements without manual oversight.

See also

• Private Bonds Approach
• ERC-3643 documentation
• CMTAT (CMTA Token) standard
• Zama's confidentiality layer for the T-REX Ledger