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The Ethereum network has reached a new milestone by adopting the ERC-3643 Ethereum Improvement Proposal (EIP). This development marks a significant step forward in compliant asset tokenization. Following rigorous review and discussions, the Ethereum community has officially recognized ERC-3643, mirroring the path previously taken by standards like ERC-20.
Details of the ERC-3643 Standard
ERC-3643 introduces a robust framework for tokenizing real-world assets (RWAs), securities, payment systems, and loyalty programs. It distinguishes itself by integrating a self-sovereign identity (SSI) framework. This feature verifies users’ eligibility for a token, offering anonymous yet verifiable credentials. The standard builds upon the foundation of ERC-20 and incorporates two critical layers of permissions to enhance security and compliance.
The first layer scrutinizes the identity and eligibility of transaction recipients. It leverages ERC 734/735 standards to ensure that identities hold necessary claims authenticated by trusted claim issuers. The second layer places global restrictions on the token itself. These restrictions include limits on daily token volume and the maximum number of token holders, ensuring regulated token circulation.
Impact on Asset Tokenization
Asset tokenization, which involves converting the value of physical or digital assets into blockchain-based digital tokens, can benefit significantly from this development. Benefits of this process include heightened liquidity, faster settlements, increased transparency, and broader market accessibility. The applications span diverse fields, ranging from fractional trading of real estate and art to financial assets and intellectual property.
The market potential for asset tokenization is vast with Roland Berger, a management consulting firm, projecting the market to grow to $10 trillion by 2030, up from the current $300 billion. Traditional financial institutions and crypto-native companies alike are exploring this technology.
Moreover, major firms like JPMorgan, Goldman Sachs, and Société Générale are already delving into this domain. Despite the crypto industry’s challenges, VanEck Research data indicates that the total market capitalization for RWAs stood at $342 billion as of September.
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