Compliance Module

The compliance module is the piece that moves regulatory enforcement into the smart contract itself. In the ERC-3643 architecture, formerly known as the T-REX protocol (Token for Regulated EXchanges) and created in July 2021 by the Tokeny team, four connected components work together: on-chain identities (based on ONCHAINID), the registry of eligible identities, the pluggable compliance modules and the token contract. ERC-3643 reached Final status as an EIP on 15 December 2023, the first regulated-tokenization standard to earn that Ethereum community approval.

Its mechanism makes transfers conditional. The transfer and transferFrom functions only proceed if the operation is valid and the counterparty is validated, and the canTransfer function checks compliance against the global rules. The module applies typical configurable restrictions: allowed or blocked countries, maximum number of holders, maximum amount per investor and holding or lock-up periods. It thereby separates rules tied to investor identity from rules tied to the offering itself.

It lets KYC/AML, investor eligibility and offering restrictions be enforced automatically on every transfer, without relying on manual off-chain controls. It is the piece that makes a security token freely transferable yet only among authorized counterparties. Tokeny created and maintains the standard, ONCHAINID provides the identity layer, and the ERC3643 Association governs its evolution after adoption.

Technical rules apply configured conditions. Asset classification, customer identification and other external obligations are not resolved by the contract.