ERC-3643 Standard

ERC-3643 Overview

ERC-3643 is an open-source token standard for regulated security tokens. It enables issuers to create and manage tokens while ensuring compliance with regulations, especially in sectors requiring controlled issuance and transferability of tokens. Fully compatible with ERC-20, it allows for interoperability across Ethereum and similar networks.

The standard provides:

• Transfer restrictions: Limit token transfers based on compliance (KYC/AML).
• Token freezing and burning: Lock or remove tokens from circulation.
• Forced transfers: Enable transfers under legal or regulatory requirements.

ERC-3643 was developed by Tokeny Solutions and officially approved in December 2023, offering a compliance-focused solution for tokenizing real-world assets such as real estate and private equity.

Link to EIP: ERC-3643 Ethereum Improvement Proposal.

New User Roles in ERC-3643

ERC-3643 defines two key roles for managing token compliance:

1. Issuer

• Role: Responsible for creating and managing security tokens.
• Functions:
  • Issue tokens and apply transfer restrictions.
  • Enforce compliance rules.
  • Burn tokens in cases of regulatory breaches.

2. Agent

• Role: Ensures compliance with regulatory standards and supports the Issuer.
• Functions:
  • Manage KYC/AML compliance.
  • Approve or reject transfers.
  • Execute forced transfers when necessary.

Key Functions of ERC-3643

1. Transfer Control:

   • Transfers are restricted based on compliance, requiring approval from the Issuer or Agent.

2. Token Freezing and Burning:

   • Freeze or burn tokens to enforce compliance or manage token supply.

3. Forced Transfers:

   • Enables Issuers or Agents to forcibly transfer tokens when required by law.

4. Whitelist/Blacklist:

   • Manage lists of authorized or unauthorized participants for enhanced security and compliance.

By integrating these roles and functions, ERC-3643 ensures security tokens meet regulatory requirements while maintaining blockchain flexibility.