Essential Points
- Real asset tokenization (RWA) converts rights to physical or financial assets into digital tokens on a blockchain, enabling fractional ownership and instant transfer.
- Technical standards such as ERC-3643, ERC-1400, and ERC-4626 are the common language that allows different platforms, custodians, and institutional investors to interoperate securely.
- Without open standards, the RWA market would be an archipelago of incompatible silos; with them, a parallel financial system emerges that can scale globally.
- Institutional adoption depends not only on technology: regulatory clarity, standardization of digital identity, and custody frameworks are the bottlenecks that determine the actual pace of expansion.
For decades, the real estate market, sovereign bonds, infrastructure funds, and private debt assets have shared a common denominator: fragmented access and opaque transfers. Historically, participation in these markets required high minimum capital, multiple intermediaries, and settlement times that could be measured in days or weeks. The tokenization of real assets, known in the sector by its English acronym RWA (Real World Assets), proposes to change that equation at its root.
What makes this moment different from the previous enthusiasm of 2018 or 2021 is the convergence of three simultaneous factors: regulatory frameworks that are beginning to provide legal certainty (MiCA in Europe, proposals underway in the US and Asia), mature blockchain infrastructure with reasonable transaction costs, and, crucially, the emergence of open technical standards that allow different platforms to speak the same language. This article examines in depth what those standards are, how they work, and what role they play in accelerating institutional adoption.
What is the tokenization of real assets?
RWA tokenization involves representing rights to a physical or financial asset using a digital token registered on a blockchain. The asset can be almost anything: real estate, a Treasury bond, a portfolio of commercial invoices, a work of art, a future harvest, or shares in a private equity fund.
The central mechanism involves at least three layers. The first is the legal layer: a legal vehicle (typically an SPV or special purpose vehicle) that holds the underlying asset and links the rights of token holders to that asset by contract. The second is the technical layer: The smart contract that issues, transfers, and manages the token while respecting regulatory eligibility restrictions for buyers. The third is the liquidity layer: secondary markets, lending protocols, and custodians that give real economic utility to the token once it is issued.
What differentiates a token from a native digital asset like Bitcoin or Ether is precisely this dependence on an off-chain legal structure. The token is not the asset itself: it is the representation of a right to it. This distinction has technical and regulatory consequences that current standards attempt to address systematically.
The problem of interoperability: why standards are needed
Imagine if every car manufacturer decided to invent its own road signage system. Technically possible; operationally, chaos. The tokenized digital asset market faces a similar challenge. When each platform issues its tokens with its own transfer rules, incompatible buyer whitelists, and inconsistent metadata structures, the result is a set of silos that cannot interoperate.
Open technical standards solve this problem by establishing common interfaces: they define how the identity of an eligible buyer is registered, how transfer restrictions are encoded, how payment flows are represented, and how regulatory compliance is verified. They are, ultimately, the communication protocol of the new tokenized financial system.
The difference between an open standard and a proprietary solution is especially relevant for institutional adoption. An asset manager, a bank custodian, or a regulated exchange cannot build critical infrastructure on a standard controlled by a single private company. Open standards, on the other hand, are public goods of the ecosystem: any team can audit them, implement them, and propose improvements.
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The main RWA tokenization standards and how they work
ERC-20: the universal base
Before discussing specific standards for RWA, it is necessary to understand why ERC-20 — Ethereum's original standard for fungible tokens — falls short for regulated assets.
ERC-20 is remarkably simple: it defines basic transfer, approval, and balance inquiry functions. This simplicity is its strength for unrestricted assets, but it is precisely its limitation for regulated financial instruments, where a transfer to an unauthorized buyer can have serious legal consequences for the issuer.
RWA standards build upon ERC-20 by adding layers of control, identity, and regulatory compliance.
ERC-1400: the partitioned values standard
ERC-1400 (along with its extension ERC-1410) was one of the first systematic attempts to create a standard for values (securitiestokenized. Its fundamental contribution is the concept of sections (slices): a single contract can manage participation classes with different rules, something essential for debt structures with senior/junior or funds with different series of participants.
The standard also introduces granular transfer controls. Before executing a transfer, the contract consults a validator that verifies whether the transaction is legal in that context: Does the recipient have the correct accreditation? Are they within the jurisdictional boundaries? Has the required KYC/AML process been completed? If the answer is no, the transfer is automatically rejected on-chain, without any manual intervention from the sender.
ERC-3643 (T-REX): Decentralized identity for regulated assets
ERC-3643, also known as the T-REX protocol (Token for Regulated EXchangesTokenization is currently the most widely adopted standard for issuing tokenized financial assets under demanding regulatory frameworks. Originally developed by Tokeny Solutions and now an open standard within the Ethereum ecosystem, its architecture is distinguished by its clean separation of three components: the token contract, the identity registry, and the compliance engine.
El identity registration It stores, off-chain and in encrypted form, the attributes of each participant: country of residence, accreditation level, KYC status. The data is not stored on the chain (which protects privacy), but the claims The verified data is indeed linked on-chain through a system compatible with the ONCHAINID standard. When a user attempts to transfer tokens, the compliance engine queries that data. claims and approves or rejects the transaction in real time.
ERC-4626: the standard for tokenized vaults
ERC-4626 addresses a different but equally important problem: the interoperability of funds and deposit vehicles. A tokenized fund—whether it's a Treasury bond fund, an invoice fund, or a real estate fund—needs a standard interface so that external protocols can query its net asset value, deposit capital, and withdraw units predictably.
Before ERC-4626, each tokenized yield protocol had its own interface, making integration costly and error-prone. ERC-4626 defines a common minimum interface: deposit, withdraw, totalAssets, convertToShares, and convertToAssets. This standardization is especially relevant for tokenized money market funds—one of the fastest-growing RWA segments—because it allows any DeFi protocol to interact with them without custom integrations.
ERC-3525: Semi-homogeneous tokens for complex instruments
Less well known but technically relevant for structured financial instruments, ERC-3525 introduces the concept of a semi-homogeneous token (Semi-Fungible TokenUnlike pure (unique) NFTs or fungible (interchangeable) tokens, ERC-3525 allows different tokens to be fungible with each other within the same "slot" but not between different slots.
This is useful for instruments such as bonds with different maturities: two bonds from the same issuer with different maturity dates are not interchangeable, but two bonds with the same characteristics are. ERC-3525 provides the technical primitive for expressing this conditional fungibility natively in smart contracts.
Other relevant frameworks: CMTAT and tokenized Rule 144A
Outside the ERC standards ecosystem, other initiatives deserve mention. CMTAT (Capital Markets and Technology Association Token), promoted by the Swiss CMTA, is an open source framework for issuing securities under Swiss law that has been adopted by several European financial institutions as a basis for pilot issues.
In the US context, discussions surrounding the tokenization of securities under Rule 144A of the Securities Act—which allows private placement among qualified institutional investors—have generated proposals for standards that incorporate eligibility restrictions directly into the smart contract, analogous in spirit to ERC-3643 but adapted to the US regulatory framework.
The role of standards in institutional adoption
The institutional adoption of RWA tokenization is not an isolated technical problem. It is the result of simultaneously resolving three types of uncertainty: regulatory, technical, and operational. Open standards directly address the second type of uncertainty, but have indirect effects on the other two.
From the point of view regulatoryA recognized standard gives regulators a concrete object of analysis. Instead of evaluating each ad hoc implementation, the regulator can determine whether ERC-3643 plus an identity framework like ONCHAINID is compatible with its KYC/AML requirements. This generalization reduces the regulatory cost of adoption for issuers.
From the point of view operatingOpen standards facilitate the technical due diligence that asset managers and custodians perform before integrating new instruments. A custodian already familiar with ERC-4626 can evaluate a new tokenized fund with far less effort than if each product had a different interface. This reduction in operational friction translates directly into faster adoption.
The roadmap: where technology and regulation converge
The most likely outlook for the RWA market in the coming years involves three converging dynamics. The first is the consolidation of two or three dominant standards per asset category: ERC-3643 for regulated securities, ERC-4626 for funds and vaults, and perhaps ERC-3525 for complex instruments. The others will tend to remain as niche solutions or merge with the dominant ones.
The second dynamic is the integration of RWA standards with sovereign digital identity systems. The eIDAS 2.0 initiative in Europe and similar projects in Asia-Pacific could provide the verified identity layer that issuers need to comply with KYC/AML without compromising user privacy. When that layer is interoperable with ERC-3643 smart contracts or their successors, the operational friction of eligibility will decrease significantly.
The third dynamic, and perhaps the most transformative, is the emergence of institutional liquidity infrastructure specifically designed for tokenized assets. Lending protocols, repo platforms, and delivery-versus-payment settlement systems (delivery versus payment) that work natively with ERC-3643 or ERC-4626 tokens will transform RWAs from a technological curiosity into an asset class with a market infrastructure comparable to that of traditional financial instruments.
The tokenization of real assets won't overnight replace the existing financial architecture. But open standards are the foundation upon which the transition is built. Every institutional issuance that adopts ERC-3643, every fund that implements ERC-4626, every custodian that integrates ONCHAINID, adds another piece to the infrastructure of the financial system for the next cycle. The question is no longer whether this transition will happen: the adoption figures for 2025-2026 have already dispelled that doubt. The question is how quickly the technical standards and regulatory frameworks will converge to truly scale.
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