stellar-protocol/ecosystem/sep-0057.md at master · stellar/stellar-protocol

Preamble

SEP: 0057
Title: T-REX (Token for Regulated EXchanges)
Author: OpenZeppelin, Boyan Barakov <@brozorec>, Özgün Özerk <@ozgunozerk>, Dennis O'Connell <@droconnel22>
Status: Draft
Created: 2025-11-26
Updated: 2025-12-15
Version: 0.1.0
Discussion: https://github.com/orgs/stellar/discussions/1814

Summary

This proposal defines a comprehensive suite of smart contracts for T-REX (Token for Regulated EXchanges) - colloquially known as RWA token - on Stellar. T-REX tokens represent tokenized real-world assets such as securities, real estate, or other regulated financial instruments that require compliance with regulatory frameworks. T-REX tokens are permissioned tokens, ensuring secure and compliant transactions for all parties involved in the token transfer.

This standard is based on the T-REX (Token for Regulated Exchanges) framework, as implemented in ERC-3643 (https://github.com/ERC-3643/ERC-3643), but introduces significant architectural improvements for flexibility and modularity.

Motivation

Real World Assets (RWAs) represent a significant opportunity for blockchain adoption, enabling the tokenization of traditional financial instruments and physical assets. However, unlike standard fungible tokens, RWAs must comply with complex regulatory requirements including but not limited to:

Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance
Identity verification and investor accreditation
Freezing capabilities for regulatory enforcement
Recovery mechanisms for lost or compromised wallets
Compliance hooks for regulatory reporting

The T-REX standard provides a comprehensive framework for compliant security tokens. This SEP adapts T-REX to the Stellar ecosystem, enabling:

Modular hook-based compliance framework with pluggable compliance rules
Flexible identity verification supporting multiple approaches (claim-based, Merkle tree, zero-knowledge, etc.)
Sophisticated freezing mechanisms at both address and token levels
Administrative controls with role-based access control (RBAC)

Architecture Overview

This T-REX standard introduces an approach built around loose coupling and implementation abstraction.

Core Design Principles

Separation of Concerns: Core token functionality is cleanly separated from compliance and identity verification
Implementation Flexibility: Compliance and identity systems are treated as pluggable implementation details
Shared Infrastructure: Components can be shared across multiple token contracts to reduce deployment and management costs
Regulatory Adaptability: The system can adapt to different regulatory frameworks without core changes

Component Architecture

The Stellar T-REX consists of several interconnected but loosely coupled components:

┌─────────────────┐    ┌──────────────────┐    ┌─────────────────────┐
│   T-REX         │───▶│   Compliance     │───▶│  Compliance Modules │
│   (Core)        │    │                  │    │  (Pluggable Rules)  │
└─────────────────┘    └──────────────────┘    └─────────────────────┘
         │
         ▼
┌─────────────────┐    ┌──────────────────┐    ┌─────────────────-─┐
│ Identity        │───▶│ Claim Topics &   │    │ Identity Registry │
│ Verifier        │    │ Issuers          │───▶│                   │
└─────────────────┘    └──────────────────┘    └─────────────────-─┘

This design enables the same core T-REX interface to work with vastly different regulatory and technical requirements for identity verification, such as Merkle trees, Zero-Knowledge proofs, claim-based systems, and others. Furthermore, the modular hook-based system supports diverse regulatory requirements through pluggable compliance rules.

Interface

The T-REX interface extends the fungible token (SEP-41) with regulatory required features: freezing, pausing and recovery.

Architecture Overview

The T-REX token contract requires only two external functions to operate:

// Compliance validation - returns true if transfer is allowed
fn can_transfer(e: &Env, from: Address, to: Address, amount: i128) -> bool;

// Identity verification - panics if user is not verified
fn verify_identity(e: &Env, user_address: &Address);

can_transfer() is expected to be exposed from a "Compliance" contract.
verify_identity() is expected to be exposed from an "Identity Verifier" contract.

These functions are deliberately abstracted as implementation details, enabling:

Regulatory Flexibility: Different jurisdictions can implement different compliance logic
Technical Flexibility: Various identity verification approaches (ZK, Merkle trees, claims)
Cost Optimization: Shared contracts across multiple tokens
Future-Proofing: New compliance approaches without interface changes

In other words, the only thing required by this T-REX design, is that the token should be able to call these expected functions made available by the compliance and identity verification contracts.

Contract Connection Interface

The token contract provides simple setter/getter functions for external contracts:

// Compliance Contract Management
fn set_compliance(e: &Env, compliance: Address, operator: Address);
fn compliance(e: &Env) -> Address;

// Identity Verifier Contract Management
fn set_identity_verifier(e: &Env, identity_verifier: Address, operator: Address);
fn identity_verifier(e: &Env) -> Address;

Integration Pattern

To deploy a compliant T-REX token and make it functional:

Deploy Core Token Contract
Deploy/Connect Compliance Contract
Deploy/Connect Identity Verifier
Configure Connections: Link the T-REX token to its compliance and identity verifier contracts using set_compliance() and set_identity_verifier(). Additionally, configure internal connections within the compliance stack (e.g., linking compliance contract to compliance modules) and identity stack (e.g., linking identity verifier to claim topics/issuers or custom registries) as needed for your implementation.

use soroban_sdk::{Address, Env, String};
use stellar_contract_utils::pausable::Pausable;
use crate::fungible::FungibleToken;

/// Real World Asset Token Trait
///
/// The `RWAToken` trait defines the core functionality for Real World Asset
/// tokens, implementing the T-REX standard for regulated securities. It
/// provides a comprehensive interface for managing compliant token transfers,
/// identity verification, compliance rules, and administrative controls.
///
/// This trait extends basic fungible token functionality with regulatory
/// features required for security tokens.
pub trait RWAToken: TokenInterface {
    // ################## CORE TOKEN FUNCTIONS ##################

    /// Returns the total amount of tokens in circulation.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    fn total_supply(e: &Env) -> i128;

    /// Forces a transfer of tokens between two whitelisted wallets.
    /// This function can only be called by the operator with necessary
    /// privileges. RBAC checks are expected to be enforced on the
    /// `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `from` - The address of the sender.
    /// * `to` - The address of the receiver.
    /// * `amount` - The number of tokens to transfer.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["transfer", from: Address, to: Address]`
    /// * data - `[amount: i128]`
    fn forced_transfer(e: &Env, from: Address, to: Address, amount: i128, operator: Address);

    /// Mints tokens to a wallet. Tokens can only be minted to verified
    /// addresses. This function can only be called by the operator with
    /// necessary privileges. RBAC checks are expected to be enforced on the
    /// `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `to` - Address to mint the tokens to.
    /// * `amount` - Amount of tokens to mint.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["mint", to: Address]`
    /// * data - `[amount: i128]`
    fn mint(e: &Env, to: Address, amount: i128, operator: Address);

    /// Burns tokens from a wallet.
    /// This function can only be called by the operator with necessary
    /// privileges. RBAC checks are expected to be enforced on the
    /// `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `user_address` - Address to burn the tokens from.
    /// * `amount` - Amount of tokens to burn.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["burn", user_address: Address]`
    /// * data - `[amount: i128]`
    fn burn(e: &Env, user_address: Address, amount: i128, operator: Address);

    /// Recovery function used to force transfer tokens from a old account
    /// to a new account for an investor.
    /// This function can only be called by the operator with necessary
    /// privileges. RBAC checks are expected to be enforced on the
    /// `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `old_account` - The wallet that the investor lost.
    /// * `new_account` - The newly provided wallet for token transfer.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["transfer", old_account: Address, new_account: Address]`
    /// * data - `[amount: i128]`
    /// * topics - `["recovery", old_account: Address, new_account: Address]`
    /// * data - `[]`
    fn recover_balance(
        e: &Env,
        old_account: Address,
        new_account: Address,
        operator: Address,
    ) -> bool;

    /// Sets the frozen status for an address. Frozen addresses cannot send or
    /// receive tokens. This function can only be called by the operator
    /// with necessary privileges. RBAC checks are expected to be enforced
    /// on the `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `user_address` - The address for which to update frozen status.
    /// * `freeze` - Frozen status of the address.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["address_frozen", user_address: Address, is_frozen: bool,
    ///   operator: Address]`
    /// * data - `[]`
    fn set_address_frozen(e: &Env, user_address: Address, freeze: bool, operator: Address);

    /// Freezes a specified amount of tokens for a given address.
    /// This function can only be called by the operator with necessary
    /// privileges. RBAC checks are expected to be enforced on the
    /// `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `user_address` - The address for which to freeze tokens.
    /// * `amount` - Amount of tokens to be frozen.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["tokens_frozen", user_address: Address]`
    /// * data - `[amount: i128]`
    fn freeze_partial_tokens(e: &Env, user_address: Address, amount: i128, operator: Address);

    /// Unfreezes a specified amount of tokens for a given address.
    /// This function can only be called by the operator with necessary
    /// privileges. RBAC checks are expected to be enforced on the
    /// `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `user_address` - The address for which to unfreeze tokens.
    /// * `amount` - Amount of tokens to be unfrozen.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["tokens_unfrozen", user_address: Address]`
    /// * data - `[amount: i128]`
    fn unfreeze_partial_tokens(e: &Env, user_address: Address, amount: i128, operator: Address);

    /// Returns the freezing status of a wallet.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `user_address` - The address of the wallet to check.
    fn is_frozen(e: &Env, user_address: Address) -> bool;

    /// Returns the amount of tokens that are partially frozen on a wallet.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `user_address` - The address of the wallet to check.
    fn get_frozen_tokens(e: &Env, user_address: Address) -> i128;

    // ################## METADATA FUNCTIONS ##################

    /// Returns the version of the token (T-REX version).
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    fn version(e: &Env) -> String;

    /// Returns the address of the onchain ID of the token.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    fn onchain_id(e: &Env) -> Address;

    // ################## COMPLIANCE AND IDENTITY FUNCTIONS ##################

    /// Sets the compliance contract of the token.
    /// This function can only be called by the operator with necessary
    /// privileges. RBAC checks are expected to be enforced on the
    /// `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `compliance` - The address of the compliance contract to set.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["compliance_set", compliance: Address]`
    /// * data - `[]`
    fn set_compliance(e: &Env, compliance: Address, operator: Address);

    /// Sets the identity verifier contract of the token.
    ///
    /// This function can only be called by the operator with necessary
    /// privileges. RBAC checks are expected to be enforced on the
    /// `operator`.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `identity_verifier` - The address of the identity verifier contract to
    ///   set.
    /// * `operator` - The address of the operator.
    ///
    /// # Events
    ///
    /// * topics - `["identity_verifier_set", identity_verifier: Address]`
    /// * data - `[]`
    fn set_identity_verifier(e: &Env, identity_verifier: Address, operator: Address);

    /// Returns the Compliance contract linked to the token.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    fn compliance(e: &Env) -> Address;

    /// Returns the Identity Verifier contract linked to the token.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    fn identity_verifier(e: &Env) -> Address;

    // ################## PAUSABLE FUNCTIONS ##################

    /// Returns true if the contract is paused, and false otherwise.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to Soroban environment.
    /// * `caller` - The address of the caller.
    fn pause(e: &Env, caller: Address);

    /// Triggers `Unpaused` state.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to Soroban environment.
    /// * `caller` - The address of the caller.
    fn unpause(e: &Env, caller: Address);

}

Events

Transfer Event

The transfer event is emitted when tokens are transferred from one address to another, including forced transfers and recovery operations.

#[contractevent]
pub struct Transfer {
    /// The address holding the tokens that were transferred
    #[topic]
    pub from: Address,
    /// The address that received the tokens
    #[topic]
    pub to: Address,
    /// The amount of tokens transferred
    pub amount: i128,
}

Mint Event

The mint event is emitted when tokens are minted to a verified address.

#[contractevent]
pub struct Mint {
    /// The address receiving the newly minted tokens
    #[topic]
    pub to: Address,
    /// The amount of tokens minted
    pub amount: i128,
}

Burn Event

The burn event is emitted when tokens are burned from an address.

#[contractevent]
pub struct Burn {
    /// The address from which tokens were burned
    #[topic]
    pub from: Address,
    /// The amount of tokens burned
    pub amount: i128,
}

Recovery Event

The recovery event is emitted when tokens are successfully recovered from a lost wallet to a new wallet.

#[contractevent]
pub struct Recovery {
    /// The old account address from which tokens were recovered
    #[topic]
    pub old_account: Address,
    /// The new account address that received the recovered tokens
    #[topic]
    pub new_account: Address,
}

Address Frozen Event

The address frozen event is emitted when an address is frozen or unfrozen.

#[contractevent]
pub struct AddressFrozen {
    /// The address that was frozen/unfrozen
    #[topic]
    pub user_address: Address,
    /// The frozen status (true for frozen, false for unfrozen)
    #[topic]
    pub is_frozen: bool,
    /// The operator who performed the action
    #[topic]
    pub operator: Address,
}

Tokens Frozen Event

The tokens frozen event is emitted when a specific amount of tokens is frozen for an address.

#[contractevent]
pub struct TokensFrozen {
    /// The address for which tokens were frozen
    #[topic]
    pub user_address: Address,
    /// The amount of tokens frozen
    pub amount: i128,
}

Tokens Unfrozen Event

The tokens unfrozen event is emitted when a specific amount of tokens is unfrozen for an address.

#[contractevent]
pub struct TokensUnfrozen {
    /// The address for which tokens were unfrozen
    #[topic]
    pub user_address: Address,
    /// The amount of tokens unfrozen
    pub amount: i128,
}

Compliance Set Event

The compliance set event is emitted when the compliance contract is updated.

#[contractevent]
pub struct ComplianceSet {
    /// The address of the new compliance contract
    #[topic]
    pub compliance: Address,
}

Identity Verifier Set Event

The identity verifier set event is emitted when the identity verifier contract is updated.

#[contractevent]
pub struct IdentityVerifierSet {
    /// The address of the new identity verifier contract
    #[topic]
    pub identity_verifier: Address,
}

Reference Implementation: Component Deep Dive

1. Identity Verification System

Philosophy: The entire identity stack is treated as an implementation detail, enabling maximum regulatory and technical flexibility.

The IdentityVerifier Trait

pub trait IdentityVerifier {
    /// Core verification function - panics if user is not verified
    fn verify_identity(e: &Env, user_address: &Address);

    // Setters and getters for the claim topics and issuers contract
    fn set_claim_topics_and_issuers(e: &Env, contract: Address, operator: Address);
    fn claim_topics_and_issuers(e: &Env) -> Address;
}

Implementation Strategies

Different regulatory environments may require different approaches. Here are some examples:

1. Claim-Based Verification (Reference Implementation)

Use Case: Traditional KYC/AML with trusted issuers
Components: ClaimTopicsAndIssuers + IdentityRegistryStorage + IdentityClaims + ClaimIssuer
Benefits: Familiar to regulators, rich metadata support

2. Merkle Tree Verification

Use Case: Privacy-focused compliance with efficient proofs
Components: ClaimTopicsAndIssuers + Merkle root storage + proof validation
Benefits: Minimal storage, efficient verification

3. Zero-Knowledge Verification

Use Case: Privacy-preserving compliance
Components: ClaimTopicsAndIssuers + ZK circuit + proof verification
Benefits: Maximum privacy, selective disclosure

4. Custom Approaches

Use Case: Jurisdiction-specific requirements
Components: ClaimTopicsAndIssuers + Custom verification logic
Benefits: Tailored to specific regulatory needs

Reference Implementation Architecture

The claim-based reference implementation demonstrates the full complexity of traditional T-REX compliance:

┌─────────────────────┐
│  Identity Verifier  │
│  (Orchestrator)     │
│                     │
└─────────────────────┘
              │
              ├────▶┌───────────────────────────┐
              │     │ Claim Topics & Issuers    │
              │     │ (Shared Registry)         │
              │     └───────────────────────────┘
              │
              ├────▶┌───────────────────────────┐
              │     │ Identity Registry Storage │
              │     │ (Investor Profiles)       │
              │     └───────────────────────────┘
              │
              ├────▶┌───────────────────────────┐
              │     │ Identity Claims           │
              │     │ (Investor Claims Storage) │
              │     └───────────────────────────┘
              │
              └────▶┌───────────────────────────┐
                    │ Claim Issuer              │
                    │ (Claims Validation)       │
                    └───────────────────────────┘

Key Components:

ClaimTopicsAndIssuers: Registry contract managing both trusted issuers and required claim types (KYC=1, AML=2, etc.).
IdentityRegistryStorage: Component storing investors identity profiles with country relations and metadata.
IdentityClaims: Required for every investor as a separate contract or as an extension to existing identity management systems. Its goal is to store cryptographic claims issued to that investor by trusted claim issuers. This component is under investor's control. Its structure mirrors the evolving OnchainID specification (https://github.com/ERC-3643/ERCs/blob/erc-oid/ERCS/erc-xxxx.md).
ClaimIssuer: Contracts belonging to trusted 3rd parties to validate cryptographic claims about investors' attributes by using multiple signature schemes (Ed25519, Secp256k1, Secp256r1).

Note that, Claim-Based Identity Verification is a reference implementation, it is not a part of the specification. For detailed interface specifications of these components, see the Appendix: Claim-Based Identity Verification Reference Implementation section.

2. Compliance System

Modular hook-based architecture supporting diverse regulatory requirements through pluggable compliance modules.

The Compliance Trait

pub trait Compliance {
    // Module management
    fn add_module_to(e: &Env, hook: ComplianceHook, module: Address, operator: Address);
    fn remove_module_from(e: &Env, hook: ComplianceHook, module: Address, operator: Address);

    // Validation hooks (READ-only)
    fn can_transfer(e: &Env, from: Address, to: Address, amount: i128) -> bool;
    fn can_create(e: &Env, to: Address, amount: i128) -> bool;

    // State update hooks (called after successful operations)
    fn transferred(e: &Env, from: Address, to: Address, amount: i128);
    fn created(e: &Env, to: Address, amount: i128);
    fn destroyed(e: &Env, from: Address, amount: i128);
}

Hook-Based Architecture

The compliance system uses a sophisticated hook mechanism:

pub enum ComplianceHook {
    CanTransfer,    // Pre-validation: Check if transfer meets compliance rules
    CanCreate,      // Pre-validation: Check if mint operation is compliant
    Transferred,    // Post-event: Update state after successful transfer
    Created,        // Post-event: Update state after successful mint
    Destroyed,      // Post-event: Update state after successful burn
}

Compliance Module Examples

Transfer Limits Module:

Hook: CanTransfer + Transferred
Logic: Enforce daily/monthly transfer limits per user

Jurisdiction Restrictions Module:

Hook: CanTransfer
Logic: Restrict transfers to blocked jurisdictions

Holding Period Module:

Hook: CanTransfer + Created
Logic: Enforce minimum holding periods for newly minted tokens

Investor Accreditation Module:

Hook: CanCreate
Logic: Verify investor accreditation before minting

Shared Compliance Infrastructure

Compliance contracts are designed to be shared across multiple T-REX tokens, reducing deployment costs and ensuring consistent regulatory enforcement:

┌─────────────┐    ┌─────────────────────┐    ┌──────────────────┐
│   Token A   │───▶│                     │───▶│ Transfer Limits  │
├─────────────┤    │   Shared Compliance │    │ Module           │
│   Token B   │───▶│   Contract          │───▶├──────────────────┤
├─────────────┤    │                     │    │ Jurisdiction     │
│   Token C   │───▶│                     │    │ Module           │
└─────────────┘    └─────────────────────┘    └──────────────────┘

3. Advanced Token Controls

Freezing Mechanisms

The system supports multiple freezing strategies to accommodate for different regulatory requirements:

Address-Level Freezing:

fn set_address_frozen(e: &Env, user_address: Address, freeze: bool, operator: Address);
fn is_frozen(e: &Env, user_address: Address) -> bool;

Use Case: Complete account suspension for regulatory investigations
Effect: Prevents all token operations (send/receive)

Partial Token Freezing:

fn freeze_partial_tokens(e: &Env, user_address: Address, amount: i128, operator: Address);
fn unfreeze_partial_tokens(e: &Env, user_address: Address, amount: i128, operator: Address);
fn get_frozen_tokens(e: &Env, user_address: Address) -> i128;

Use Case: Escrow scenarios, disputed transactions
Effect: Freezes specific token amounts while allowing operations on remaining balance

Recovery System

Two distinct recovery flows are supported:

Identity Recovery: Managed in the Identity Stack (Identity Registry Storage), transfers the identity contract reference and profile (including country data) from old account to new account, and creates a recovery mapping.

fn recover_identity(e: &Env, old_account: Address, new_account: Address, operator: Address);

Balance Recovery: Managed by the T-REX token, transfers tokens from old to new account after verifying the identity recovery mapping exists

fn recover_balance(e: &Env, old_account: Address, new_account: Address, operator: Address) -> bool;

Forced Transfers

For regulatory compliance (court orders, sanctions):

fn forced_transfer(e: &Env, from: Address, to: Address, amount: i128, operator: Address);

Use Case: Court-ordered asset transfers, regulatory seizures
Authorization: Requires operator with forced transfer permissions
Compliance: Bypasses normal compliance validation checks (operator responsibility)

4. Access Control & Governance

T-REX tokens require proper access control to ensure that sensitive operations are only performed by authorized entities:

Operator Authorization: All administrative functions require operator authorization
Flexible Access Control: While the T-REX interface itself doesn't prescribe a specific access control model, implementations can integrate with external access control systems as needed
Compliance Integration: Access control permissions should be integrated with compliance rules to ensure regulatory requirements are met

Extensions

The T-REX standard can be extended with additional functionality beyond the core specification. Extensions are optional modules that add specialized features while maintaining compatibility with the base T-REX interface.

Document Manager (ERC-1643)

The Document Manager extension provides document management capabilities for T-REX tokens, following the ERC-1643 standard. This is particularly useful for attaching legal documents, prospectuses, or regulatory disclosures to token contracts.

Key Features:

Attach documents with URI, hash, and timestamp
Update existing document metadata
Remove documents from the contract
Retrieve individual or all documents

Use Cases:

Legal agreements and terms of service
Offering memorandums and prospectuses
Regulatory compliance documents
Audit reports and certifications

Custom Extensions

Implementers are free to create custom extensions tailored to their specific requirements.

Deviations from ERC-3643

Several limitations in the original ERC-3643 standard and its reference implementation were identified and respectively addressed:

1. Tight Coupling Issues

Problem: ERC-3643 tightly couples identity verification with specific contract structures
Solution: Abstract identity verification as pluggable implementation detail

2. Inflexible Identity Models

Problem: Hardcoded ERC-734/735 identity contracts don't translate to all blockchain architectures
Solution: Support multiple identity verification approaches (Merkle, ZK, claims, custom)

3. Redundant Contract Hierarchies

Problem: Complex IdentityRegistry ↔ IdentityRegistryStorage relationships
Solution: Direct access patterns

4. Limited Compliance Flexibility

Problem: Monolithic compliance validation
Solution: Modular hook-based compliance system

Upgrade and Migration Strategies

Compliance Evolution:

Modular compliance system supports rule updates without token redeployment
New compliance modules can be added for evolving regulations

Identity System Migration:

Abstract identity verification enables migration between verification approaches
Gradual migration strategies for existing user bases

For general contract upgrade patterns and best practices, refer to SEP-49: Upgradeable Contracts.

Appendix: Claim-Based Identity Verification Reference Implementation

IMPORTANT NOTICE: This appendix describes a reference implementation and is NOT a part of the T-REX specification. The T-REX standard only requires that an IdentityVerifier contract exposing a verify_identity() function. The claim-based approach described here is one possible implementation among many (others include Merkle tree verification, zero-knowledge proofs, or custom approaches). This section is provided for informational purposes to demonstrate a complete, production-ready implementation that follows traditional KYC/AML compliance patterns.

Overview

The claim-based approach uses cryptographic claims issued by trusted authorities (KYC providers, compliance firms) to verify investor identities. This implementation consists of four main components that work together:

ClaimTopicsAndIssuers: Trust registry defining required claim types and authorized issuers
IdentityRegistryStorage: Storage for investor identity profiles and country relations
IdentityClaims: Per-investor contract storing cryptographic claims
ClaimIssuer: Validator contracts operated by trusted third parties

ClaimTopicsAndIssuers Interface

The ClaimTopicsAndIssuers contract acts as the trust registry, defining which claim topics are required for token participation and which issuers are authorized to provide those claims.

Purpose:

Maintains a registry of trusted claim issuers (e.g., KYC providers, compliance firms)
Defines which types of claims are required (e.g., KYC=1, AML=2, Accredited Investor=3)
Maps each trusted issuer to the specific claim topics they are authorized to issue
Can be shared across multiple tokens to reduce deployment costs

Interface:

pub trait ClaimTopicsAndIssuers {
    // ################## CLAIM TOPICS ##################

    /// Adds a claim topic (for example: KYC=1, AML=2).
    ///
    /// Only an operator with sufficient permissions should be able to call this
    /// function.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `claim_topic` - The claim topic index.
    ///
    /// # Events
    ///
    /// * topics - `["claim_added", claim_topic: u32]`
    /// * data - `[]`
    fn add_claim_topic(e: &Env, claim_topic: u32, operator: Address);

    /// Removes a claim topic (for example: KYC=1, AML=2).
    ///
    /// Only an operator with sufficient permissions should be able to call this
    /// function.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `claim_topic` - The claim topic index.
    ///
    /// # Events
    ///
    /// * topics - `["claim_removed", claim_topic: u32]`
    /// * data - `[]`
    fn remove_claim_topic(e: &Env, claim_topic: u32, operator: Address);

    /// Returns the claim topics for the security token.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    fn get_claim_topics(e: &Env) -> Vec<u32>;

    // ################## TRUSTED ISSUERS ##################

    /// Registers a claim issuer contract as trusted claim issuer.
    ///
    /// Only an operator with sufficient permissions should be able to call this
    /// function.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `trusted_issuer` - The claim issuer contract address of the trusted
    ///   claim issuer.
    /// * `claim_topics` - The set of claim topics that the trusted issuer is
    ///   allowed to emit.
    ///
    /// # Events
    ///
    /// * topics - `["issuer_added", trusted_issuer: Address]`
    /// * data - `[claim_topics: Vec<u32>]`
    fn add_trusted_issuer(
        e: &Env,
        trusted_issuer: Address,
        claim_topics: Vec<u32>,
        operator: Address,
    );

    /// Removes the claim issuer contract of a trusted claim issuer.
    ///
    /// Only an operator with sufficient permissions should be able to call this
    /// function.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `trusted_issuer` - The claim issuer to remove.
    ///
    /// # Events
    ///
    /// * topics - `["issuer_removed", trusted_issuer: Address]`
    /// * data - `[]`
    fn remove_trusted_issuer(e: &Env, trusted_issuer: Address, operator: Address);

    /// Updates the set of claim topics that a trusted issuer is allowed to
    /// emit.
    ///
    /// Only an operator with sufficient permissions should be able to call this
    /// function.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `trusted_issuer` - The claim issuer to update.
    /// * `claim_topics` - The set of claim topics that the trusted issuer is
    ///   allowed to emit.
    ///
    /// # Events
    ///
    /// * topics - `["topics_updated", trusted_issuer: Address]`
    /// * data - `[claim_topics: Vec<u32>]`
    fn update_issuer_claim_topics(
        e: &Env,
        trusted_issuer: Address,
        claim_topics: Vec<u32>,
        operator: Address,
    );

    /// Returns all the trusted claim issuers stored.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    fn get_trusted_issuers(e: &Env) -> Vec<Address>;

    /// Returns all the trusted issuers allowed for a given claim topic.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `claim_topic` - The claim topic to get the trusted issuers for.
    fn get_claim_topic_issuers(e: &Env, claim_topic: u32) -> Vec<Address>;

    /// Returns all the claim topics and their corresponding trusted issuers as
    /// a Mapping.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    fn get_claim_topics_and_issuers(e: &Env) -> Map<u32, Vec<Address>>;

    /// Checks if the claim issuer contract is trusted.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `issuer` - The address of the claim issuer contract.
    fn is_trusted_issuer(e: &Env, issuer: Address) -> bool;

    /// Returns all the claim topics of trusted claim issuer.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `trusted_issuer` - The trusted issuer concerned.
    fn get_trusted_issuer_claim_topics(e: &Env, trusted_issuer: Address) -> Vec<u32>;

    /// Checks if the trusted claim issuer is allowed to emit a certain claim
    /// topic.
    ///
    /// # Arguments
    ///
    /// * `e` - Access to the Soroban environment.
    /// * `issuer` - The address of the trusted issuer's claim issuer contract.
    /// * `claim_topic` - The claim topic that has to be checked to know if the
    ///   issuer is allowed to emit it.
    fn has_claim_topic(e: &Env, issuer: Address, claim_topic: u32) -> bool;
}

IdentityRegistryStorage Interface

The IdentityRegistryStorage contract stores identity information for verified investors, including their identity contract references and country relations.

Purpose:

Maps wallet addresses to their onchain identity contracts
Stores country information for regulatory compliance
Supports both individual and organizational identities
Manages recovery account mappings for lost wallet scenarios

Interface:

pub trait IdentityRegistryStorage: TokenBinder {
    /// The specific type used for country data in this implementation.
    type CountryData: FromVal<Env, Val>;

    /// Stores a new identity with a set of country data entries.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `account` - The account address to associate with the identity.
    /// * `identity` - The identity address to store.
    /// * `country_data_list` - A vector of initial country data entries.
    /// * `operator` - The address authorizing the invocation.
    ///
    /// # Events
    ///
    /// * topics - `["identity_stored", account: Address, identity: Address]`
    /// * data - `[]`
    fn add_identity(
        e: &Env,
        account: Address,
        identity: Address,
        country_data_list: Vec<Self::CountryData>,
        operator: Address,
    );

    /// Removes an identity and all associated country data entries.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `account` - The account address whose identity is being removed.
    /// * `operator` - The address authorizing the invocation.
    ///
    /// # Events
    ///
    /// * topics - `["identity_unstored", account: Address, identity: Address]`
    /// * data - `[]`
    ///
    /// Emits for each country data removed:
    /// * topics - `["country_removed", account: Address, country_data:
    ///   CountryData]`
    /// * data - `[]`
    fn remove_identity(e: &Env, account: Address, operator: Address);

    /// Modifies an existing identity.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `account` - The account address whose identity is being modified.
    /// * `new_identity` - The new identity address.
    /// * `operator` - The address authorizing the invocation.
    ///
    /// # Events
    ///
    /// * topics - `["identity_modified", old_identity: Address, new_identity:
    ///   Address]`
    /// * data - `[]`
    fn modify_identity(e: &Env, account: Address, identity: Address, operator: Address);

    /// Recovers an identity by transferring it from an old account to a new
    /// account.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `old_account` - The account address from which to recover the
    ///   identity.
    /// * `new_account` - The account address to which the identity will be
    ///   transferred.
    /// * `operator` - The address authorizing the invocation.
    ///
    /// # Events
    ///
    /// * topics - `["identity_recovered", old_account: Address, new_account:
    ///   Address]`
    /// * data - `[]`
    fn recover_identity(e: &Env, old_account: Address, new_account: Address, operator: Address);

    /// Retrieves the stored identity for a given account.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `account` - The account address to query.
    fn stored_identity(e: &Env, account: Address) -> Address;

    /// Retrieves the recovery target address for a recovered account.
    ///
    /// Returns `Some(new_account)` if the account has been recovered to a new
    /// account, or `None` if the account has not been recovered.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `old_account` - The old account address to check.
    fn get_recovered_to(e: &Env, old_account: Address) -> Option<Address>;
}

IdentityClaims Interface

The IdentityClaims contract manages on-chain identity claims with cryptographic signatures. This contract is controlled by the investor and stores claims issued by trusted authorities.

Purpose:

Store cryptographic claims issued to an investor
Manage claim lifecycle (add, retrieve, remove)
Support multiple claims per topic from different issuers
Enable claim-based identity verification

Interface:

pub trait IdentityClaims {
    /// Adds a new claim to the identity or updates an existing one.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `topic` - The claim topic (u32 identifier).
    /// * `scheme` - The signature scheme used.
    /// * `issuer` - The address of the claim issuer.
    /// * `signature` - The cryptographic signature of the claim.
    /// * `data` - The claim data.
    /// * `uri` - Optional URI for additional claim information.
    ///
    /// # Events
    ///
    /// * topics - `["claim_added", claim_id: BytesN<32>, topic: u32]`
    /// * data - `[]`
    ///
    /// OR (for updates):
    ///
    /// * topics - `["claim_changed", claim_id: BytesN<32>, topic: u32]`
    /// * data - `[]`
    fn add_claim(
        e: &Env,
        topic: u32,
        scheme: u32,
        issuer: Address,
        signature: Bytes,
        data: Bytes,
        uri: String,
    ) -> BytesN<32>;

    /// Retrieves a claim by its ID.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `claim_id` - The unique claim identifier.
    fn get_claim(e: &Env, claim_id: BytesN<32>) -> Claim;

    /// Retrieves all claim IDs for a specific topic.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `topic` - The claim topic to filter by.
    fn get_claim_ids_by_topic(e: &Env, topic: u32) -> Vec<BytesN<32>>;
}

Claim Structure:

Each claim contains:

Topic: Numeric identifier (e.g., KYC=1, AML=2)
Scheme: Signature algorithm identifier
Issuer: Address of the claim issuer contract
Signature: Cryptographic signature
Data: Claim information (can include expiration, metadata)
URI: Optional URI for additional information

ClaimIssuer Interface

The ClaimIssuer contract validates cryptographic claims about investors. These contracts are operated by trusted third parties (KYC providers, compliance firms).

Purpose:

Validate cryptographic signatures on claims
Support multiple signature schemes (Ed25519, Secp256k1, Secp256r1)
Manage claim revocation and expiration
Provide key management for signing authorities

Interface:

pub trait ClaimIssuer {
    /// Validates whether a claim is valid for a given identity. Panics if claim
    /// is invalid.
    ///
    /// # Arguments
    ///
    /// * `e` - The Soroban environment.
    /// * `identity` - The identity address the claim is about.
    /// * `claim_topic` - The topic of the claim to validate.
    /// * `scheme` - The signature scheme used.
    /// * `sig_data` - The signature data as bytes: public key, signature and
    ///   other data required by the concrete signature scheme.
    /// * `claim_data` - The claim data to validate.
    fn is_claim_valid(
        e: &Env,
        identity: Address,
        claim_topic: u32,
        scheme: u32,
        sig_data: Bytes,
        claim_data: Bytes,
    );
}

Verification Flow

The following describes how these components work together during token operations:

Off-chain: Investor submits identity documents to KYC Provider
Off-chain: KYC Provider verifies identity and signs claim with private key
On-chain: Signed claim is stored in investor's IdentityClaims contract
On-chain: During token operations (transfer/mint), the token contract:
- Calls IdentityVerifier's verify_identity()
- Required claim topics from ClaimTopicsAndIssuers is retrieved
- Claims from investor's IdentityClaims contract are fetched
- ClaimIssuer is called to validate signatures
- Revocation status is checked
- Issuer trust is verified via ClaimTopicsAndIssuers

Note: The KYC Provider and Claim Issuer are the same entity. Signing happens off-chain; only the signed claim and revocation data are stored on-chain.

Changelog

v0.1.0 - Initial draft

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Preamble

Summary

Motivation

Architecture Overview

Core Design Principles

Component Architecture

Interface

Architecture Overview

Contract Connection Interface

Integration Pattern

Events

Transfer Event

Mint Event

Burn Event

Recovery Event

Address Frozen Event

Tokens Frozen Event

Tokens Unfrozen Event

Compliance Set Event

Identity Verifier Set Event

Reference Implementation: Component Deep Dive

1. Identity Verification System

The IdentityVerifier Trait

Implementation Strategies

Reference Implementation Architecture

2. Compliance System

The Compliance Trait

Hook-Based Architecture

Compliance Module Examples

Shared Compliance Infrastructure

3. Advanced Token Controls

Freezing Mechanisms

Recovery System

Forced Transfers

4. Access Control & Governance

Extensions

Document Manager (ERC-1643)

Custom Extensions

Deviations from ERC-3643

Upgrade and Migration Strategies

Appendix: Claim-Based Identity Verification Reference Implementation

Overview

ClaimTopicsAndIssuers Interface

IdentityRegistryStorage Interface

IdentityClaims Interface

ClaimIssuer Interface

Verification Flow

Changelog