What is the T-REX Protocol (ERC-3643)?

As the digital securities market matures, the need for standardized, compliant infrastructure has become paramount. One of the leading solutions to emerge in this space is the T-REX protocol, developed by the Luxembourg-based fintech company Tokeny.

T-REX stands for Token for Regulated Exchanges. It is a decentralized set of global tools, based on the Ethereum (ETH +0.48%) blockchain, designed to allow for the interoperable, frictionless, and compliant transfer of tokenized securities.

The T-REX Framework (ERC-3643)

The T-REX framework—which has since evolved into the widely recognized ERC-3643 standard—identifies key areas throughout the token issuance process to ensure interoperability and compliance. Rather than just creating a token, Tokeny developed a system of permissioned tokens that enforce rules at the blockchain level.

Tokeny CEO Luc Falempin has described the standard as enabling the issuance of fully compliant Security Token Offerings (STOs). The framework relies on three key pillars:

1. Identity Management System: A decentralized system to manage the digital identities of all stakeholders (issuers, investors, agents).
2. Validation Certificates: Cryptographic proofs that ensure an investor is eligible to hold the token (e.g., they have passed KYC/AML checks and are in a compliant jurisdiction).
3. Transfer Management: A governance system that acts as a decentralized validator. It controls transfers and ensures that tokens can only be moved between eligible wallets.

These three components essentially allow issuers to use a decentralized validator to control transfers and ensure investors meet the obligations in each jurisdiction where the tokens are distributed. If a wallet does not hold the necessary validation certificate (e.g., the investor’s KYC has expired), the transfer is automatically blocked by the smart contract.

Why Standards Matter

By providing a robust framework for these areas, issuers that adhere to the T-REX standard can expect high levels of security and operational efficiency.

Prior to standards like T-REX/ERC-3643, the industry suffered from fragmentation, with various companies creating closed-source, proprietary protocols. Tokeny chose a different path by making the T-REX standard open-source. This transparency encourages broader adoption across capital markets, as it allows developers and exchanges to build compatible infrastructure easily.

About Tokeny

Tokeny is a fintech company founded in 2017 and based in Luxembourg. Its primary goal is to develop and offer a comprehensive platform to assist institutions looking into tokenization.

The company has maintained that while blockchain technology faces hurdles, it remains one of the most significant advancements in financial history. By recognizing regulatory pain points and creating solutions like T-REX to address them, Tokeny helps form the ecosystem necessary to drive mass adoption across capital markets.