French cryptography startup Zama is integrating its fully homomorphic encryption (FHE) protocol with Apex-backed T-REX Ledger to add a confidentiality layer for ERC-3643-based tokenized assets, a standard that lets issuers embed identity checks and transfer restrictions into tokenized securities.
Zama, which raised $73 million in Series A funding in 2024 to commercialize FHE, said the integration aims to make confidentiality a built-in part of tokenized asset infrastructure rather than an add-on layered over existing systems. The companies said the integration would allow regulated institutions to use public blockchain infrastructure without exposing sensitive positions and transaction data, a sticking point that has slowed broader institutional use of public networks for regulated assets.
Institutional users “shield” ERC‑3643 positions
Zama founder Rand Hindi told Cointelegraph that institutions using T-REX would be able to “shield” existing positions by wrapping ERC-3643 tokens into confidential equivalents, preserving balances 1:1 while encrypting future transfers and resulting balances end-to-end.
Zama described T-REX Ledger as a neutral infrastructure layer built around ERC-3643, where identity and rules-based compliance sit in smart contracts and underlying Know Your Customer data stays offchain, enabling issuers to keep parameters such as interest rates, withholding taxes or liquidation thresholds confidential on public rails. Hindi argued this removed the traditional “trade off” between regulatory compliance and confidentiality by pushing both into shared, programmable infrastructure rather than separate silos.
Competing privacy models are emerging
The integration arrives amid a wider industry debate over how institutions should handle onchain privacy. Matter Labs CEO Alex Gluchowski has argued that zero-knowledge systems like zkSync’s Prividium are “the only way” for enterprises to achieve real privacy and onchain interoperability, allowing private environments to settle atomically via Ethereum and other ZK domains. ZK proofs let institutions prove transactions are valid without revealing the underlying data while anchoring security to Ethereum’s base layer.
Digital Asset co-founder Shaul Kfir countered that ZK is not necessary for most real-world assets and that Canton’s permissioned architecture combines privacy and interoperability without requiring every participant to validate every transaction. Kfir also emphasized that cryptographic guarantees cannot fully substitute legal enforceability, pointing to onchain hacks as evidence that institutional systems still rely on legal frameworks to resolve disputes over user intent.
Zama’s FHE pitch
Hindi positioned FHE as complementary to both ZK and permissioned approaches, saying it addresses the “shared state problem” that limits both by allowing networks to run shared computations over encrypted data from many users at once. Instead of hiding data by not sharing it or requiring each user to prove their own state, FHE enables collective processing on encrypted inputs.
He argued this makes it possible to implement confidential, compliant decentralized finance primitives or daily threshold checks for regulators on public infrastructure, with only a few seconds of extra latency for encryption and decryption and no change to T-REX’s underlying throughput or public chain composability.
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