The Ethereum community has officially signed the ERC-3643 Ethereum Improvement Proposal (EIP), declaring it a recognized standard for the compliant tokenization of real-world assets (RWAs). According to an announcement made on December 15th, the proposal has reached its final status and has been formally reviewed and agreed upon within the Ethereum community. This step is noted for its similarity to the process of creating past standards like ERC-20 and other popular ones.
Key Details on ERC-3643
ERC-3643 is considered a standard for security tokenization, RWAs, payment systems, and loyalty programs. The association behind the proposal noted that it provides anonymous yet verifiable identity information by allowing users to verify the eligibility of a token through a self-sovereign identity (SSI) framework.
The approved standard proposed in 2021 builds upon ERC-20. It includes two distinct permission layers to enhance security and compliance. The first layer focuses on the identity and eligibility of the transaction recipient by using ERC-734/-735 standards to check if the necessary claims exist on the identity and if they have been verified by trusted claim regulators.
The second layer implements global restrictions on the token, such as daily token volume and maximum number of token holders, to ensure a controlled and regulated token circulation. Asset tokenization involves converting the value of a physical or crypto asset into a crypto token on a blockchain or distributed ledger.
High Expectations for RWAs
Potential benefits of asset tokenization include increased liquidity, a faster approval process, transparency, and accessibility to diversified markets. Real-world applications include enabling the fractional trading of real estate, art, financial assets, and intellectual property.
Management consultancy firm Roland Berger predicts that asset tokenization could reach a market value of 10 trillion dollars by 2030, which represents a significant increase compared to the current value of approximately 300 billion dollars.
Asset tokenization is considered one of the main trends in the finance sector by a wide array of traditional and crypto firms. Prominent companies researching this technology include JPMorgan, Goldman Sachs, and Societe Generale. Data from VanEck Research indicates that despite negative developments in the crypto industry, the total market value for RWAs reached 342 billion dollars in September.
