What is ERC-37 and how does it work when issuing asset-backed tokens?

Tokenisation isn't new — but the standards we build it on are.

If you've been around Ethereum for a while, you know the classics: ERC-20 for fungible tokens, ERC-721 for NFTs, and ERC-1155 for hybrid collections.

Now, there's a new kid on the block that's purpose-built for real-world assets: ERC-37.

Let's break it down in simple terms — what it is, what it solves, and how it works when you're issuing tokens backed by something that actually exists.

The problem ERC-37 solves

Most token standards weren't designed for real-world asset (RWA) logic.

• ERC-20 knows nothing about ownership deeds, yield payments, or lien transfers.
• ERC-721 can show who owns a thing, but not how that thing connects to the legal world — or how to split it into smaller, tradable fractions.

That's where ERC-37 steps in.

It's a contract standard built specifically to make asset-backed tokens, debt instruments, and property deeds manageable directly on-chain — with a structure that keeps them compliant, fractional, and updateable over time.

What ERC-37 actually is

Think of ERC-37 as the missing layer between blockchain and legal reality.

It's not just another token template — it's a framework for representing ownership and obligation in a way that's legally recognisable and technically flexible.

At its core, ERC-37 provides:

• Deed Registry Logic – Each token can represent an asset deed or legal right. The smart contract stores who owns what, plus metadata linking it to verified off-chain records (like a property title, share certificate, or invoice).
• Fractionalisation Built In – You can split a single real-world asset (say, a building, a bond, or a car) into hundreds or thousands of fractions — each fully traceable, tradeable, and linked to the same parent deed.
• Debt Vehicle Support – Native functions for managing loans, repayments, interest streams, and collateralised positions. Perfect for tokenised credit or private lending structures.
• Transfer Restrictions – Built-in whitelisting, KYC mapping, and jurisdiction filters for compliance.
• Dynamic Updates – The underlying asset data can be updated as ownership changes or valuations shift, keeping the token aligned with reality.

Essentially, ERC-37 turns the blockchain into a living registry of off-chain assets — with rules that make sense both to code and to courts.

How it works when issuing asset-backed tokens

When an issuer creates an asset-backed token using ERC-37, here's the general flow:

1. Register the asset – The issuer records a verified real-world asset (a deed, note, or instrument) in the ERC-37 registry. This links the token ID to off-chain proof of ownership or custody.
2. Mint tokens – The issuer mints a supply of ERC-37 tokens that represent fractional or full ownership of the asset.
3. Apply permissions – Jurisdictional and KYC logic are defined at mint time, ensuring tokens can only move between approved holders.
4. Set up revenue logic – The contract can distribute yield, dividends, or rental income directly to token holders.
5. Enable secondary trading – Holders can trade their fractions on compliant venues — every transfer updates the on-chain registry and maintains a transparent chain of custody.

All of this happens while keeping the legal context intact — something that traditional token standards can't do natively.

Example use cases

🏠 Tokenised real estate

A developer tokenises a property deed under ERC-37.

Each fraction represents a verified share of ownership in that property.

Rental income can flow directly through the contract, and ownership transfers automatically update the registry.

💵 Tokenised debt

A lending protocol issues ERC-37 tokens representing claims on a loan portfolio.

Interest payments are streamed to holders, and repayments automatically reduce the outstanding balance.

Each debt instrument exists as a verified, traceable entry — compliant by design.

🏛️ Deed registries for governments

Municipal or national authorities could use ERC-37 to manage property titles or vehicle registrations on-chain, cutting down paperwork and fraud risk, while maintaining an auditable ledger accessible to approved institutions.

The bigger picture

ERC-37 is a step toward bridging digital and physical ownership.

It doesn't just let you represent assets on-chain — it makes them functionally manageable, fractionally tradeable, and regulator-friendly.

On networks like Asentum, ERC-37 plays a key role: it enables issuance, compliance, and settlement of real-world assets in one seamless flow.

The blockchain handles the speed and transparency; ERC-37 ensures the legal and financial structure stays intact.

Together, they form the foundation for a new generation of asset markets — where deeds, bonds, and shares all live and move natively on-chain, backed by real value.