Zama, a French cryptography startup, is integrating its technology with T-REX Ledger—backed by Apex Group—to introduce a confidentiality layer for ERC-3643 tokenized assets.
The ERC-3643 standard enables issuers to embed identity verification and transfer restrictions directly into tokenized securities. Zama’s integration aims to make privacy a core feature of tokenized asset infrastructure, rather than an optional add-on.
The company, which raised $73 million in a 2024 Series A round to advance fully homomorphic encryption (FHE), said the move is designed to allow regulated institutions to use public blockchains without exposing sensitive transaction data or portfolio positions—an issue that has limited broader institutional adoption.
The announcement comes amid an ongoing industry debate over how best to ensure privacy onchain, with approaches such as zero-knowledge proofs, permissioned networks, and FHE all competing to play a role in the evolving tokenization ecosystem.
Institutions can “shield” tokenized positions
Rand Hindi said institutions using T-REX Ledger will be able to “shield” their holdings by wrapping ERC-3643 tokens into confidential versions. This process preserves balances on a 1:1 basis while encrypting future transactions and resulting balances end-to-end.
According to Zama, T-REX Ledger functions as a neutral infrastructure layer built around ERC-3643, where identity verification and compliance rules are embedded in smart contracts, while sensitive Know Your Customer (KYC) data remains offchain. This setup allows issuers to keep parameters like interest rates, tax rules, or liquidation thresholds private while still operating on public blockchains.
Hindi argued that this approach removes the traditional trade-off between compliance and confidentiality by combining both into a shared, programmable system rather than separating them into isolated frameworks.
Competing approaches to onchain privacy
The integration comes amid broader debate over how institutions should balance privacy and interoperability onchain.
Alex Gluchowski of Matter Labs argued that zero-knowledge (ZK) systems—such as zkSync’s Prividium—offer the only viable path to achieving both privacy and interoperability. He said ZK proofs allow institutions to validate transactions without exposing underlying data, while still anchoring security to Ethereum.
However, Shaul Kfir of Digital Asset disagreed, stating that permissioned systems like Canton can already deliver privacy and interoperability without requiring every participant to verify each transaction. He added that legal enforceability remains essential, noting that cryptographic systems alone cannot resolve disputes, especially in cases like onchain hacks.
Zama’s FHE approach
Hindi positioned fully homomorphic encryption (FHE) as complementary to both models. He said it addresses the “shared state” limitation by enabling networks to perform computations directly on encrypted data across multiple users simultaneously.
This capability could support use cases such as confidential, compliant DeFi workflows or automated regulatory checks on public infrastructure. While FHE introduces slight latency due to encryption and decryption, Hindi said it does not impact T-REX’s throughput or the composability of public blockchains.
