RWA Exclusive Token Standard: Analysis of ERC-3643’s Compliance Characteristics and Application Scenario

Overview: The ERC-3643 token standard is designed for regulated assets, addressing compliance bottlenecks in real-world asset (RWA) tokenization by integrating authentication and automated compliance into blockchain technology.
Key Features:
- Modular Architecture: Separates identity registry and compliance logic, enabling flexible rule adjustments without altering core token functions.
- Two-Tier Permission Control: Combines ERC-20 compatibility with added compliance layers:
  - Identity verification (ERC-734/735) for recipient qualifications.
  - Global rules (e.g., transfer limits, holder caps) for regulatory adherence.
- Core Components:
  - Identity Registry: Links on-chain addresses to verified identities (ONCHAINID).
  - Compliance API: Enforces dynamic rules (e.g., AML policies) and blocks non-compliant transactions.
  - Trusted Issuers Registry: Manages authorized claim issuers.
  - Token Contract: Extends ERC-20 with compliance controls (e.g., freezing, conditional transfers).
Compliance Mechanisms:
- Identity Verification: Requires pre-transfer checks via isVerified(), ensuring only KYC/AML-approved holders participate.
- Real-Time Enforcement: Uses canTransfer() to validate investor qualifications, jurisdiction rules, and holding limits.
Regulatory Alignment:
- Supports Hong Kong’s 2025 stablecoin rules, including holder identity verification and transaction screening.
- Embeds regulatory requirements (e.g., blacklisting, jurisdictional checks) directly into smart contracts.
Advantages:
- Transparency: On-chain records provide regulators with real-time oversight.
- Flexibility: Compliance rules are upgradable without token contract modifications.
- Efficiency: Automates compliance, reducing costs and manual intervention.
Conclusion: ERC-3643 bridges traditional finance and blockchain by embedding regulatory compliance into token protocols, enabling secure, scalable RWA tokenization.

In the convergence of blockchain technology and traditional financial markets, RWAs have become one of the most transformative innovations. However, the tokenization of real-world assets (RWAs) has long faced development bottlenecks due to the lack of regulatory compliance frameworks and industry standards. Against this backdrop, the ERC-3643 standard emerged as the first Ethereum token standard designed specifically for regulated assets.

Unlike the commonly used ERC-20 standard, ERC-3643, through its built-in authentication and automated compliance engine, creates a technical architecture that complies with securities regulations while retaining the efficiency advantages of blockchain, resolving the core contradictions of traditional financial asset blockchains. In this article, the Beosin security team will analyze the ERC-3643 token standard, its compliance features, and application scenarios.

ERC-3643 Token Standard Analysis

1. Token Specifications

ERC-3643 addresses the core requirement of compliant asset tokenization through a modular architecture. This decoupled design decouples business logic, making the system highly configurable. Key among these is the separation of the identity registry from the compliance contract. This design allows for flexible adjustments to compliance rules based on jurisdictional requirements without altering the core token logic. When a user initiates a transfer, the token contract automatically queries the compliance contract, which then cross-checks identity claims in the identity registry, forming an automated compliance decision chain.

The technical architecture of ERC-3643 adopts a two-tier permission control, which inherits the functions of ERC-20 while adding two key compliance layers. The first layer focuses on the identity and qualification verification of the transaction recipient, using the ERC-734/735 standard to verify the existence of the identity claim and the authentication status of the trusted issuer; the second layer implements global rules and constraints on the token itself, such as setting daily transfer limits and upper limits on the number of holders. This layered design not only ensures the continuous verification of investor qualifications, but also provides issuers with flexible regulatory enforcement tools to meet the multi-dimensional compliance needs of security tokens. The core components of its architecture are as follows:

Identity Registry: As the core module connecting on-chain addresses and on-chain identities (ONCHAINID), it ensures the verifiable and compliant identities of all token holders. Its core functions include registerIdentity(), updateIdentity(), updateCountry(), batchRegisterIdentity(), and isVerified(). The verification function, isVerified(), checks the Claim Topics Registry (to check the claim type) and the Trusted Issuers Registry (to check the claim issuer) when called, returning true if both are verified.

Compliance API: A dynamic compliance rules engine that enforces global compliance policies (e.g., holder caps, cross-border restrictions), links to token contracts, and blocks illegal transactions in real time. Its core functions include bindToken(), unbindToken(), transferred(), created(), destroyed(), and canTransfer(). It supports modular replacement of compliance logic, allowing issuers to dynamically upgrade rules (e.g., adding AML policies) without impacting the token contract.

●Trusted Issuers Registry: used to manage trusted entities that are authorized to issue declarations.

●Token Contract: Expands compliance control functions based on ERC-20 compatibility. Key functions include conditional transfers, token freezing and thawing, contract lifecycle control, and token metadata management.

Claim Topics Registry: Defines the types of claims required for tokens (e.g., KYC levels, investor qualifications), serving as a “checklist” for identity verification.

2. Identity verification and compliance enforcement mechanisms

The identity verification mechanism requires each token holder to complete identity verification with a trusted claim issuer before being whitelisted in the identity registry. When a transfer occurs, the token contract calls the isVerified() function through the compliance contract before the transfer. This function verifies in real time whether the recipient's address is in the identity registry and whether its associated identity contract contains the required claims in the claim subject registry. These claims must be signed by authorized parties in the trusted issuer registry. This process ensures that only qualified investors who have passed KYC/AML checks can hold or receive security tokens.

Compliance enforcement is implemented through the canTransfer() function, which is called before each transfer and performs the following key checks:

Investor qualification matching: Verifying that the recipient meets the investor requirements for a specific asset class (e.g., Qualified Investor status)

Jurisdiction restrictions: Ensure that the jurisdictions of both parties to the transaction allow such transactions

●Holding control: Check whether the transfer will cause a single investor to exceed the holding limit

● Global rule compliance: Verify compliance with other global rules set by the issuer or regulator

This design embeds compliance requirements directly into the token contract, transforming regulatory rules into automatically executed on-chain controls. These rules are dynamically upgradeable and can be updated through the compliance contract without modifying the token contract itself to adapt to the evolving compliance framework.

Taking the Hong Kong Monetary Authority (HKMA)'s stablecoin regulatory regime, which will be implemented in August 2025, as an example, ERC-3643 can meet the regulatory requirements of the following regulations:

i) Identity verification of stablecoin holders

Article 6.5.3 of the "Guidelines for the Supervision of Licensed Stablecoin Issuers": Licensees should identify all operations related to the entire token life cycle of each specified stablecoin they issue, which should cover deployment, configuration, minting, destruction, upgrade, suspension, restoration, blacklisting, unblacklisting, freezing, unfreezing, whitelisting, and the use of any operating wallet.

Article 5.11 of the "Guidelines on Combating Money Laundering and Counter-Terrorist Financing": Unless the licensee can demonstrate to the satisfaction of the HKMA that such risk mitigation measures are effective in preventing and combating money laundering and terrorist financing activities and other crimes, the identity of each stablecoin holder should be verified by one of the following parties: the licensee (even if the holder has no client relationship with the licensee); an appropriately regulated financial institution or virtual asset service provider; or a reliable third party.

These two guidelines require stablecoin licensees to verify the identities of stablecoin holders and manage permissions for all operations throughout the token lifecycle. ERC-3643 supports binding each stablecoin holder's wallet address to on-chain identity claims (such as KYC status and place of residence), which are verified in real time through the Compliance Contract.

ii) Transaction Control and Real-time Screening

Article 5.10 of the Guidelines on Combating Money Laundering and the Financing of Terrorism states that licensees may implement various measures to prevent the risk of stablecoins being used for illicit activities. Examples of such measures include:

(a) using appropriate technological solutions (such as blockchain analysis tools) to screen stablecoin transactions and associated wallet addresses on an ongoing basis beyond initial distribution;

(b) blacklisting wallet addresses identified as being associated with sanctioned or illegal activity;

and clause 6.36: (a) adopt a risk-based approach to monitoring stablecoin transfers with stablecoin transfer counterparties...; and (b) review information obtained from due diligence measures on stablecoin transfer counterparties under paragraph 6.33 (regularly and/or upon the occurrence of a triggering event, where aware of any heightened money laundering and terrorist financing risks)...

The ERC-3643 Compliance contract supports customizable transaction rules (e.g., allowing transfers only between KYC addresses) and dynamically updates whitelists and blacklists. If the recipient fails KYC or is on the blacklist, the transaction is automatically terminated.

Conclusion

ERC-3643's core competitiveness lies in encoding regulatory requirements directly into the token protocol, providing a secure bridge for traditional finance to enter the blockchain world. This design addresses the most pressing compliance concerns of traditional financial institutions, including investor verification, jurisdictional restrictions, and transaction monitoring. Operationally, ERC-3643 provides regulators with unprecedented transparency and oversight capabilities. All authentication records and compliance decisions are verifiably stored on-chain, providing direct access to regulators without relying on post-hoc reporting from the issuer. This transparency not only reduces regulatory costs but also enhances market integrity, laying the foundation for mainstream adoption of tokenized assets.