The ERC3643 Association recently unveiled a new UI plugin tool that allows DeFi protocols to perform checks in accordance with the ERC3643 standard.
The ERC3643 standard, also known as the T-REX (Token for Regulated Exchanges) standard, is a modification of ERC-20.
Unlike the ERC-20 token, ERC-3643 is a permissioned token that uses smart contract technology to define conditional transfer functions.
This means that decentralized validators can only approve certain transactions after meeting predetermined rules. This enables compliance structures that can be used for regulated assets, such as securities, while maintaining the standard of ERC-20 functionality.
Developed in collaboration with DevPro and Tokeny, this new UI tool allows ERC-20 compliant DeFi applications to communicate with authorized ERC-3643 tokens. This includes real-world assets, token securities, loyalty tokens, stablecoins and CBDCs.
Read more: Ethereum improvement proposals to keep an eye on in 2024
Dennis O’Connell, president of the ERC-3643 Association, told Blockworks that compliance rules are embedded directly at the token level through ERC-3643.
“As an extension of ERC-20, ERC-3643 ensures interoperability with all ERC-20 supporting applications. The key distinction lies in denying transactions or actions if counterparties do not meet compliance requirements, effectively bridging compliance and interoperability,” said O’Connell.
He notes that unlike other standards that use wallet whitelisting for know-your-customer (KYC) checks, ERC-3643 uses digital identity to whitelist users via verifiable credentials.
“This ensures that the compliance validation process takes place completely on-chain while protecting privacy. No actual data will be published in the chain; only verifiable credentials, which are evidence of verification by trusted parties designated by token issuers,” O’Connell said.
Read more: Dencun and Pralectra: Core Ethereum Developers Chart an Ambitious 2024
The standard was initially proposed to the Ethereum community in 2021, but did not receive approval until December last year. Companies currently exploring this technology include APEX Group, Aztec Group and Capgemini, to name a few.
