ERC-1400 vs. ERC-3643: Security Token Standards

Specific advantage: Defines a partition-based ownership model with certificate-level transfer restrictions. This matters for representing complex financial instruments like asset-backed securities (ABS) or multi-jurisdictional offerings where different investor tranches have unique rules.

Specific advantage: Built as a minimal interface standard (ERC-20 compatible) for maximum wallet/DEX compatibility. This matters for secondary market liquidity, enabling tokens to be listed on platforms like Polymath, TokenSoft, and OpenFinance with less integration friction.

Specific advantage: Integrates a decentralized identity (DID) and rules engine directly into the token contract via the T-REX protocol. This matters for automated, real-time enforcement of KYC/AML and transfer controls, reducing reliance on off-chain validators.

Specific advantage: Uses an optimized claim-based redemption model and status codes, reducing gas costs for frequent compliant transfers. This matters for high-volume payment tokens or dividends where transaction cost predictability is critical for enterprise adoption.

You are issuing a traditional security (equity, debt) and need a well-understood, modular standard. Ideal for projects using established platforms like Polymath that handle compliance off-chain and prioritize broad exchange compatibility.

You require self-contained, on-chain regulatory compliance for a payment token, stablecoin, or utility asset with restrictions. Best for ecosystems built around the Tokeny solutions suite where automated, transparent rule enforcement is the primary requirement.

Specific advantage: Defines a modular framework for complex compliance logic. Its core is the Security Token interface, which can be extended with custom Certificate and Controller modules for jurisdiction-specific rules (e.g., Reg D, Reg S). This matters for issuers who need to encode intricate, multi-tiered investor accreditation and transfer restrictions directly into the token's logic.

Specific advantage: Enforces compliance checks on-chain for every transfer via the canTransfer function, providing an immutable, auditable log of all permissioned actions. This matters for regulated institutions and auditors who require a single source of truth for proving adherence to securities laws, reducing off-chain reconciliation overhead.

Key trade-off: Its modular, "build-your-own" design requires significant development resources and deep smart contract expertise. Projects like Polymath provide tooling, but you must still integrate and audit custom modules. This matters for teams with limited engineering bandwidth or those seeking a faster time-to-market for a standard security offering.

Specific advantage: Provides a complete, audited, and production-ready suite of smart contracts (the T-REX suite) that handle KYC/AML, identity, and transfer control by default. This matters for issuers who prioritize speed and security, wanting a proven, plug-and-play system without building compliance logic from scratch.

Specific advantage: Anchors permissions to verified off-chain identities via its ONCHAINID (ERC-734/735) standard, separating investor identity from wallet addresses. This matters for maintaining compliance across wallet changes and enabling complex, identity-based actions like voting or dividend distribution that persist beyond a single address.

Key trade-off: Its tightly integrated suite (T-REX, ONCHAINID) can create vendor lock-in and may be over-engineered for simple use cases. Interoperability with generic DeFi protocols can be more challenging. This matters for projects planning to integrate with a broad set of third-party DeFi tools or those with highly custom, non-standard requirements.

Specific advantage: Built-in partitioning and document management for complex compliance. This matters for multi-jurisdictional offerings (e.g., Polymath, Securitize) where different investor classes have unique restrictions. The standard excels at encoding legal logic directly into token transfers.

Specific advantage: 5+ years of production use with $1B+ in tokenized assets. This matters for protocols seeking battle-tested dependencies and existing tooling (e.g., Tokeny, ADDX). The longer track record provides a larger pool of audited implementations and developer knowledge.

Specific disadvantage: High gas overhead and steep implementation complexity. This matters for projects with limited dev resources or those issuing high-volume, low-value tokens. The standard's flexibility can lead to bloated, expensive smart contracts that are difficult to audit.

Specific advantage: Optimized for lower transaction costs using an allowlist-based permissioning system. This matters for scaling to millions of token holders (e.g., real estate fractions, loyalty points) where transfer fees directly impact ROI. It simplifies the compliance check logic on-chain.

Specific advantage: Native integration with the ONCHAINID (ERC-734/735) standard for reusable, self-sovereign identity. This matters for creating portable investor profiles that work across multiple compliant dApps (e.g., Swarm, Tokeny T-REX), reducing KYC redundancy.

Specific disadvantage: Younger ecosystem with fewer live, large-scale deployments compared to ERC-1400. This matters for enterprise clients requiring vendor support and proven legal opinions. While growing, the pool of auditors and integrators with deep ERC-3643 experience is smaller.