Bank-Favored Token Standard: ERC3643

Traditional financial instruments moving onto the blockchain through a new standard for "permissioned tokens," complete with regulatory demands. While this may prove advantageous, it also poses a notable risk that could twist the fundamental principles of cryptocurrency.

, and Administrator

2025 September 19 . 11:02 PM

2 min read

Bank-Preferred Token Standard: ERC3643 Garners Affection from Financial Institutions

Bank-Favored Token Standard: ERC3643

In the ever-evolving world of blockchain technology, a new standard is gaining traction that could revolutionize the way we handle identity and tokenized assets. This standard, known as ERC-3643, is a set of smart contracts associated with the ERC-3643 token, and it is being championed by ONCHAINID.

ERC-3643 is a standard for permissioned tokens, designed to bring traditional financial instruments onto the blockchain. It was developed by the Luxembourg-based company Tokeny and has been endorsed by a coalition of Web3 companies, including Bit2Me, Brickken, Compellio, Dekalabs, DigiShares, Hacken, Forte Protocol, FullyTokenized, RealEstate.Exchange, Stobox, and Zoth, with key contributions from Dario Lo Buglio, co-founder of Brickken.

One of the key features of ERC-3643 is its compliance with established regulatory requirements, such as KYC and AML. Transfers of ERC-3643 tokens are subject to these regulatory requirements, making it an attractive option for financial institutions looking to migrate to blockchains. The potential adoption of ERC-3643 could streamline the process of bringing government bonds, stocks, or other traditional securities into digital wallets and trading them on decentralized exchanges.

ONCHAINID, the on-chain identity system linked to ERC-3643 transfers, could help improve the current practice of identity data collection and storage by exchanges, banks, and telecom providers. It allows for the verification of user identities by different parties, with encrypted proofs of identity going on-chain and the data itself remaining off-chain. This approach could potentially create a "Universal Login" that allows verified users to log in anywhere.

However, the adoption of ERC-3643 is not without its challenges. The standard is explicitly designed to tokenize Real World Assets (RWAs) in compliance with regulatory requirements. While this could benefit traditional financial institutions, there is a risk that ERC-3643 could expand beyond RWAs and become a replacement for existing tokens and cryptocurrencies, potentially threatening the idealistic foundation of crypto.

As of now, more than 40 companies have issued tokens worth around $28 billion using the ERC-3643 standard. It has obtained an EIP number and thus become "official." ERC-3643 tokens contain a mechanism that verifies the identity and authorization of participants before allowing a transaction, making them a potential standard for traditional financial instruments on the blockchain and expanding the market for tokens and strengthening decentralized finance.

The potential of ONCHAINID and ERC-3643 is not limited to traditional financial institutions. If ERC-3643 strictly sticks to Real World Assets, it will not take anything away from crypto users but could give them the ability to easily trade traditional securities on decentralized exchanges. This could open up new possibilities for users without imposing any coercion.

The establishment of an on-chain ID system such as ONCHAINID could open up a world of opportunities, from simplifying the process of bringing traditional securities onto the blockchain to improving the security and privacy of user identities. As the technology continues to evolve, it will be interesting to see how ONCHAINID and ERC-3643 are adopted and how they shape the future of blockchain technology.