In his recent “Project Crypto” address, SEC Chairman Paul Atkins emphasized the need for a regulatory framework that enables innovation while safeguarding market integrity—specifically calling for “principles-based conditions” such as periodic disclosures, whitelisting and adherence to token standards like ERC‑3643. However, the regulatory objectives outlined by Chairman Atkins are not only met—and materially exceeded—by the native capabilities of the Algorand blockchain and its Algorand Standard Asset (ASA), our equivalent to Ethereum’s ERC-20 standard, but supported natively by the core protocol rather than relying on smart contracts.
Unlike ERC‑3643, which depends on complex and potentially brittle smart contract architectures to enforce compliance, Algorand’s permissioning token capability, on-chain role-based access control (RBAC) mechanism, and self-sovereign identity solutions such as Rocca are natively integrated into the blockchain. This design ensures compliance is not an afterthought but a foundational feature, delivering a more secure, cost-effective, and scalable solution for tokenizing regulated assets.
Algorand’s approach aligns more precisely with the “innovation exemption” vision laid out in Atkins’ speech—allowing institutions to enter the market without prescriptive burdens, while still adhering to the core policy goals of the federal securities laws. With integrated support for whitelist/blacklist functionality, asset freezing, revocation, and verified identity credentials, Algorand not only supports commercial viability but is uniquely positioned to future-proof financial tokenization in the United States and beyond.
Chairman Atkins' vision centers on two foundational technologies Algorand has built natively as part of our core protocol: permissioned tokens and on-chain role-based access control (RBAC). While the broader industry scrambles to retrofit these capabilities through complex smart contracts, Algorand recognized early that these aren't optional add-ons—they are essential infrastructure for regulated finance. In traditional markets, transfer agents, compliance officers, and regulatory frameworks work together to ensure market integrity. Algorand's unique and powerful architecture serves these same functions digitally, with greater efficiency, transparency, and reliability than their analog predecessors.
The power of Algorand’s approach becomes clear when examining how permissioned tokens work. Unlike ERC3643’s multi-contract approach, ASAs bring RBAC capabilities natively to all digital assets deployed on the Algorand blockchain. Need to restrict holdings to accredited investors? That's a native feature. Required to freeze assets during a regulatory investigation? Built-in functionality. Mandated to implement periodic reporting and disclosures? The infrastructure is already there. This isn't theoretical—it's how Archax, Quantoz, and Midas are operating today, processing millions in tokenized assets while maintaining full regulatory compliance.
Perhaps most importantly, Algorand dispels the myth that regulatory compliance requires a private blockchain. The permissions that Chairman Atkins advocates for apply to the tokens themselves, not the underlying network. This architectural distinction is crucial: institutions gain all the benefits of public blockchain infrastructure–unparalleled security, global accessibility, and permanent auditability–while maintaining complete control over their assets. It’s the best of both worlds, delivered through elegant engineering rather than regulatory workarounds.
Algorand Standard Assets (ASAs): Built-in RBAC for regulatory compliance on Layer 1
Algorand's foundational architecture provides a powerful and integrated approach to RBAC, specifically through its ASAs. RBAC isn't just a nice-to-have—it's the difference between a token that regulators approve and one they reject. Financial institutions need to control who can trade, when they can trade, and under what conditions.
Algorand's ASAs make this simple. Unlike other platforms where RBAC might require complex smart contract implementations, ASAs offer a suite of built-in features that directly address the needs of tokenized securities:
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- Whitelisting and Blacklisting: ASAs natively support the ability to define authorized participants (whitelisting) and restrict unauthorized ones (blacklisting) at the asset level. This is crucial for meeting regulatory requirements around Know Your Customer (KYC) and Anti-Money Laundering (AML).
- Account Freezing: The capability to freeze accounts associated with an ASA provides a critical tool for compliance and risk management, allowing issuers to halt activity in cases of suspicious behavior or regulatory mandates.
- Asset Recovery: With the rising adoption of self-custody, the option to recover tokens and assets in case of compromised wallets or lost keys has become crucial to meeting user protection requirements.
- Asset Revocation: In situations requiring the recall of tokenized assets, ASAs offer a built-in revocation mechanism, ensuring compliance with legal and contractual obligations.
When combined, these features provide a comprehensive and flexible framework for issuing and managing tokenized securities and stablecoins per existing regulatory requirements.
This native permissioning framework is already securing real-world assets. Archax, a UK digital asset exchange, has successfully tokenized Abrdn money market funds using ASAs, while Quantoz's EURD stablecoin demonstrates full compliance with Europe's MiCA regulation.
Additionally, Midas mTBILL, launched in May 2025, is a tokenized U.S. Treasury‑bill certificate fully issued on Algorand, designed to give European retail investors access to short‑term Treasury ETF exposure—a sector traditionally reserved for institutional capital. These platforms, powered by Algorand, demonstrate tangible business value:
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- Archax reduced settlement times from T+2 to instant for Abrdn’s money market funds.
- Quantoz processes EURD transactions at a fraction of the cost of Ethereum-based stablecoins.
- Midas mTBILL features no minimum investment, a net yield of approximately 4.06 %, and supports atomic swaps ($2 million USDC swap executed in under 2 seconds for just ~$0.0004 in transaction fees). This demonstrates Algorand’s capacity to effortlessly support permissioned, compliant, and low‑cost asset flows without custom smart contracts.
ASAs are primitives (first-class features native to the core protocol) and therefore benefit from the security, cost efficiency, instant finality, and post-quantum history offered by the Algorand blockchain. These characteristics translate into reduced settlement risk and efficient operational costs for any regulated token deployed to Algorand. Algorand provides the foundational capabilities required for production-ready tokenization, without requiring the deployment of complex smart contracts, as illustrated in the following comparison:
* ASA burning does not apply to revocable assets.
** ASA global pause is currently achieved by freezing each holder. A proposal for an additional ASA global freeze in one shot is being evaluated (see the technical discussion for further details).
What this means for businesses and institutions: You get enterprise-grade compliance tools out of the box. There is no need for complex smart contracts to enable the base compliance layer–you can deploy compliant tokens on Algorand with zero code.
Algorand vs. ERC3643: Simplicity over complexity
While the feature comparison table above shows parity in capabilities, the true distinction between the ERC3643 approach and Algorand’s capabilities lies in how these features are implemented and what that means for your business or institution:
What this means in practice
Development Complexity: ERC3643 requires specialized blockchain developers to write, integrate, test, and potentially audit multiple smart contracts. With Algorand, your existing development team can implement tokenization using standard API calls—no blockchain expertise required.
Cost Predictability: Ethereum gas fees fluctuate wildly based on network congestion. Algorand's fixed $0.001 fee means you can budget accurately and scale without surprises.
Risk Profile: Every smart contract is a potential attack vector. ERC3643's multiple contracts multiply this risk, potentially requiring expensive audits and introducing complex technical dependencies. Algorand's native implementation eliminates smart contract risk entirely—the security is built into the blockchain protocol itself.
Speed to Market: While competitors spend months in development and audit cycles, Algorand users are already processing transactions. This isn't theoretical—Archax, Quantoz, and Midas launched their compliant tokens in weeks, not quarters.
Rocca Wallet: Secure, self-sovereign identity and verifiable credentials
Beyond permissioned tokens, regulatory compliance also demands robust identity solutions. While the ERC3643 standard provides the ONCHAINID solution for securely managing on-chain identities, Algorand is developing Rocca, our self-custodial identity wallet solution. Rocca will be a white-label wallet solution combining decentralized identity management with digital asset capabilities, allowing users to control their credentials, achievements, and compliance attestations.
Intermezzo, our new custodial solution for abstracting the complexities of blockchain integration and key management for businesses and institutions, has already been deployed in production at WorldChess. Intermezzo will form the backend API for the Rocca wallet, which is under development and is the first major milestone in building the Universal Chess Passport. Once Rocca is integrated, it will enable seamless verification of player identities, ratings, and tournament participation across both digital and physical venues. This will enable chess players to easily transfer their credentials to other online services or over-the-board tournaments.
A key targeted outcome of the Rocca wallet is to provide a comprehensive framework for managing trusted identities in regulated environments. Built on standards for Decentralized Identifiers (DIDs) and Verifiable Credentials (VCs), Rocca will offer financial institutions and enterprises a production-ready solution for implementing compliant tokenization with self-sovereign identity at its core.
Decentralized identity management
Where ONCHAINID deploys identity smart contracts on EVM-based networks, Rocca will leverage Algorand's efficient architecture to provide decentralized identifiers (DIDs) that are:
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- Cryptographically secured without the overhead of complex smart contracts–essentially bank-grade security without the complexity or cost of custom development.
- Globally accessible while maintaining privacy through selective disclosure.
Verifiable Credentials framework
Similar to ONCHAINID's claim system, Rocca implements standard Verifiable Credentials that enable:
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- User-controlled and portable across platforms; one KYC process can work everywhere, reducing customer onboarding time, effort, and risk.
- KYC/AML attestations from trusted issuers.
- Portable achievements and certifications.
- Revocable credentials for maintaining system integrity.
- Zero-knowledge proofs for privacy-preserving verification.
Rocca demonstrates how Algorand’s core architecture can more efficiently enable the same capabilities as ONCHAINID, with the following key advantages:
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- Native integration with Algorand’s permissioning system: While ONCHAINID requires separate registries for identity, claims, and trusted issuers, Rocca seamlessly integrates with Algorand's native ASA permissions. This means compliance checks happen automatically during transfers, not through separate processes.
- Simplified architecture: ERC3643 requires multiple interconnected contracts, including Identity Registry, Trusted Issuers Registry, Claim Topics Registry, and individual identity contracts. Rocca wallet will enable these identity management components into a wallet-based solution that interfaces directly with Algorand's native features.
By combining Algorand's native permissioning features with standard DIDs for identity management, Rocca provides a production-ready solution for securities tokenization that is simpler to implement, more cost-effective to operate, and ready to scale for institutional adoption.
Financial smart contract standard: Moving beyond ERC3643
Algorand's commitment to advancing financial innovation extends to its ongoing work on a new Financial Smart Contract standard, which can accommodate more complex and articulated tokenizations on the application layer. This initiative champions high modularization and a "separation of concerns" approach, leading to a highly composable and auditable ecosystem.
A key innovation within the upcoming Algorand Financial Contract standard is modeling financial contract cash flows according to the ACTUS standard. ACTUS (Algorithmic Contract Types Unified Standard) defines deterministic financial contracts, ensuring predictable and verifiable execution on the Algorand Virtual Machine (AVM). This machine-readable and executable contract format offers significant advantages:
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- Frictionless Instrument Lifecycle: The new standard removes frictions throughout the financial instrument lifecycle, from issuance to termination, by standardizing and automating the execution of financial contracts.
- Atomic Delivery-vs-Payment (DvP): Algorand's instant finality and atomic swaps eliminate counterparty risk, enabling truly atomic DvP transactions – a critical requirement for financial markets.
- Deterministic Cash Flow Analysis: The ACTUS-compliant contracts enable precise and predictable analysis of cash flows, providing clear answers to "when, how much, and to whom."
- Easier Quantitative Risk Management: The contracts' deterministic nature facilitates more accurate and efficient quantitative risk management, as financial obligations and cash flows are clearly defined and verifiable on-chain.
ACTUS ensures that the contract's financial cash flows are defined according to a global standard, whose correctness and precision are guaranteed regardless of the blockchain.
Comprehensive features for a robust financial ecosystem
Beyond the core RBAC and financial contract standards, Algorand is also exploring and integrating other vital features to build a complete ecosystem for financial tokenization:
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- Identity Management and KYC: Algorand is actively exploring using Decentralized Identifiers (DIDs) and Verifiable Credentials, adhering to W3C standards, to establish robust on-chain identity management and KYC processes.
- Payment Agent: An on-chain payment processor is being developed to integrate both ownership and identity modules with ACTUS financial contract cash flows. This leverages Algorand's stablecoin ecosystem, benefiting from its instant finality and atomic swaps, thereby eliminating counterparty risk.
- Transfer Agent: Designed to handle both primary distribution and secondary market activities, the Transfer Agent is fully integrated with the token permissions, ensuring seamless and compliant asset transfers.
Algorand's method is elegant and systematic, leveraging established standards rather than developing new solutions for requirements not exclusive to blockchain technology, such as identity (DID, Verifiable Credentials already standardized by W3C) or financial contracts and cash flows (ACTUS).
This modular approach ensures the preservation of composability and backward compatibility, facilitating seamless integration across decentralized finance (DeFi) and traditional finance (TradFi) ecosystems, instead of segregating them to meet regulatory demands individually. This engineering solution effectively untangles complex requirements, precisely encapsulating each implementation and paving the way for a truly interconnected financial future.
This architectural choice prevents the common pitfall observed in other ecosystems, where overly complex standards often try to solve distinct requirements such as identity, regulations, cash flows, payments, fractional ownership, and permissioned or restricted transfers. This leads to fragmentation, poor modularity, and insufficient composability (e.g., ERC1400, ERC1410, ERC1462, ERC3643, DS Token, CMTA, etc.).
This commitment to the separation of concerns is vital for composability and interoperability.
The path forward for tokenization
The tokenization market is projected to reach $16 trillion by 2030. The winners won’t be those with the most complex technology–they’ll be those who make compliance simple, transactions affordable, and integration seamless.
What makes Algorand well-positioned for enabling this transformation? Algorand offers:
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- Production-ready infrastructure securing real assets today.
- Low transaction fees that make tokenization economically viable.
- Instant finality enabling instant settlement (clearing = settlement).
- Native compliance features that satisfy regulatory requirements without sacrificing efficiency.
- Unified capital market infrastructure (KYC, AML, compliance, primary distribution, cashflows and payments, trading, secondary market transfers, etc.).
- Industry-leading reliability with ZERO downtime since 2019 and post-quantum secure transaction history.
The robust support for tokenizing financial instruments on Algorand offers significant benefits to various participants across the traditional financial value chain. Issuers can streamline the issuance process, arrangers can leverage automated contract execution, and asset managers can gain greater transparency and efficiency. Risk managers, lenders, payment agents, and transfer agents will all benefit from the increased automation, reduced counterparty risk, and enhanced data accuracy provided by Algorand's advanced tokenization capabilities.
For policy makers: Algorand provides a transparent, auditable platform that enhances market oversight while reducing systemic risk.
For businesses: Whether you’re tokenizing securities, real estate, or creating new financial products, Algorand offers the fastest path from concept to compliant deployment.
As regulatory clarity increases, institutions need solutions and future-proof infrastructure. Algorand’s built-in compliance, powerful yet simple RBAC, and ACTUS-standardized smart contracts mean it’s uniquely positioned to lead the next generation of asset tokenization, providing an infrastructure ready today for the future of digital finance.
Next steps
Algorand is ready to support policymakers and businesses in the future of digital finance. As one of the most mature blockchains, Algorand is well-positioned to lead the wave of tokenization as regulatory clarity emerges and businesses are ready to adopt blockchain technology at scale.
For policy makers, regulators, and businesses interested in learning more about Algorand, please contact us at https://algorand.co/algorand-foundation/contact.
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