The Big Whale: There are already many token standards on Ethereum such as ERC-20. Why do you need to launch a new one?
Luc Falempin (Tokeny): Today, the ERC-20 is the most widely used token in the Ethereum ecosystem but, overall, it only allows you to do two things: check the balance of an address and make transfers, which is largely insufficient to meet traceability requirements. Since the launch of Ethereum, several standards have emerged to try to address this issue, such as 1400, but here again there were a huge number of regulatory constraints.
As a technology provider, we offer financial institutions the ability to issue, manage and transfer securities on a blockchain. As there was no token format that suited us, we decided in 2018 to offer our own standard to meet our customers' needs.
How is your standard different from others?
To put it simply, our standard will make it possible to incorporate the various regulatory elements such as the identity of an investor so that it is not accessible to just anyone but also so that its owner can be identified by a regulator. This is very interesting because it means that control can be brought to bear even on a public blockchain. It is no longer necessary to control the entire network. That's why, for a long time, most experiments took place on private blockchains.
Can we now say that tokenisation will mainly take place on public blockchains such as Ethereum?
At any rate, that's the trend we're seeing more and more. We believe that the future is multi-chain but that it will be based on the same technological foundation, namely that proposed by Ethereum, namely EVM because it is the most widely shared standard today and therefore a powerful vector of interoperability.
In the development of the 3643 standard, we are integrating this future since it is compatible on any EVM blockchain compatible with the same smart contract address. In practical terms, this means that if an actor using it is on a blockchain that is experiencing problems, the migration can be carried out in a matter of minutes.
Yet there are regularly new narratives emerging that claim to dethrone Ethereum.
Yes, and even technologies that seem more interesting. But in the end, history has shown that it's not always the best technology that wins out. What institutions want is a network that promotes interoperability, works and doesn't cost the earth. Ethereum currently meets most of these expectations, or is well on the way to doing so.
Why aren't more standards of this type in use today?
Simply because traditional finance and the crypto world have been slow to come together. People have been talking about tokenisation (read our report "Is tokenisation the future of finance?") for a long time, but it took several phases of experimentation to confirm a potential impact of blockchain on market infrastructures. Starting to talk about a standard 6 years ago was extremely precursory.
Today, who can use ERC-3643?
Our standard is accessible to any company that wants to use it. It is coded in Solidity, Ethereum's programming language, making EVM (Ethereum Virtual Machine) compatible. Its protocol is completely open-source, which means that anyone can submit improvements. Today, ERC-3643 is in its V4.
What's in it for you? Do you get any fees on transfers?
Absolutely not. What's more, even if Tokeny no longer exists, the ERC-3643 can continue to exist and be exchanged. Today, one of the major obstacles to the development of tokenisation is the lack of standards shared by all players. This is what we want to push forward with ERC-3643. We are at the very beginning of tokenisation, so any standard proposed will inevitably benefit the greatest number.
We are also confident because we have been working on these subjects since 2017 and we have nevertheless acquired solid experience and a certain reputation. In the future, banks will be looking for players with in-depth knowledge of the subject capable of orchestrating all the operations required to tokenise assets. They will inevitably delegate because it will be too complicated and therefore too risky for them to do it themselves. That's our bet, based on what we've been seeing for over 6 years now.
Are you not worried that other standards will emerge or copy ERC-3643?
There are new ones every day! But once again, the key is to develop a standard that is shared by as many people as possible. What's more, the ERC-3643 is largely perfectible and is intended more as a base from which it is possible to build your own solution with your own parameters. It is therefore more advantageous to build from this base than to start from scratch. In fact, our own orchestration platform is built around this standard.
Tokeny is not well known to the general public. Why is that?
Because we mainly provide white label services for financial institutions. But we are behind a huge number of experiments that have taken place in recent years. Today, there are around forty of us working in the company, which is based in Luxembourg.
You have also launched a not-for-profit association in Luxembourg to promote the standard. Is the aim to create a kind of consortium?
In a way, yes. The aim of the association is to get as many players as possible around the table to develop as many things as possible together, whether it's an improvement to the ERC-3643, the development of common platforms to encourage the development of tokenisation or educational content for businesses.
As I specified earlier, you don't have to be a member of the association to use the standard. Today, our founding members include Invesco, Aztec Group, Apex, Bitstamp, Polygon and Capgemini. Taurus has also recently joined us. In all, the association has around fifty members. We also work regularly with players such as Circle and Chainlink.
