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The Ethereum community has officially endorsed the ERC-3643 Ethereum Improvement Proposal (EIP), establishing it as a recognized standard for the compliant tokenization of real-world assets (RWAs).
As per a Dec. 15 announcement, the proposal has attained its final status, indicating it has undergone formal review, discussion, and consensus within the Ethereum community. This process mirrors the establishment of ERC-20 and other widely adopted standards in the past.
ERC-3643 serves as a standard for the tokenization of securities, RWAs, payment systems, and loyalty programs. It verifies users’ eligibility for a token through a self-sovereign identity (SSI) framework, offering anonymous yet verifiable credentials, as explained by the organization behind the proposal.
The ratified standard, proposed in 2021, is built upon ERC-20 and integrates two separate permission layers to bolster security and compliance.
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The first layer emphasizes the identity and eligibility of the transaction’s recipient, employing ERC 734/735 standards to confirm that the necessary claims are present on the identity and authenticated by trusted claim issuers. The second layer enforces global restrictions on the token itself, including limits on daily token volume and the maximum number of token holders, ensuring controlled and regulated token circulation.
Asset tokenization refers to the process of converting the value of a physical or digital asset into a digital token on a blockchain or distributed ledger. Potential advantages of asset tokenization include enhanced liquidity, quicker settlements, transparency, and access to diverse markets. Real-world applications encompass enabling fractional trading of real estate, art, financial assets, and intellectual property.
Management consulting firm Roland Berger projects that asset tokenization will expand to a market valued at $10 trillion by 2030, a substantial increase from the current valuation of approximately $300 billion.
Asset tokenization is being explored by a broad spectrum of traditional and crypto-native companies as a key trend in finance. Prominent firms investigating the technology include JPMorgan, Goldman Sachs, and Société Générale. Data from VanEck Research indicates that the total market capitalization for RWAs reached $342 billion in September, despite challenges faced by the crypto industry.
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