HTS x EVM - KYC & Update (Part 2)

In Part 1 of the series, you saw how to mint, transfer, and burn an NFT using Hedera'a EVM and Hedera Token Service (HTS) System Smart Contracts. In this guide, you’ll learn the basics of how to configure / permission native Hedera Tokens via a Smart Contract. Specifically, you will learn how to:

Create and configure an NFT.
Grant and revoke a Know Your Customer (KYC) flag.
Update the KYC key with an Admin (to rotate compliance keys, for example)

You can take a look at the complete code in the Hedera-Code-Snippets repository

Prerequisites

ECDSA account from the Hedera Portal.
Basic understanding of Solidity.

Step 1. Add KYC key when creating HTS NFT Collection

The previous tutorial covered creating NFT collection. Everything remains largely the same except for the following changes:

We just need to add one additional line for managing the KYC key that is able to grant/remove KYC.
We will be using createNonFungibleToken instead of createNonFungibleTokenWithCustomFees for this exercise.

Key Code Snippet:

contracts/MyHTSTokenKYC.sol

contract MyHTSTokenKYC is HederaTokenService, KeyHelper, Ownable {
    ... 
    function createNFTCollection(
        string memory _name,
        string memory _symbol
    ) external payable onlyOwner {
        require(tokenAddress == address(0), "Already initialized");

        name = _name;
        symbol = _symbol;

        // Build token definition
        IHederaTokenService.HederaToken memory token;
        token.name = name;
        token.symbol = symbol;
        token.treasury = address(this);
        token.memo = "";

        // Keys: SUPPLY + ADMIN + KYC -> contractId
        IHederaTokenService.TokenKey[]
            memory keys = new IHederaTokenService.TokenKey[](3);
        keys[0] = getSingleKey(
            KeyType.SUPPLY,
            KeyValueType.CONTRACT_ID,
            address(this)
        );
        keys[1] = getSingleKey(
            KeyType.ADMIN,
            KeyValueType.CONTRACT_ID,
            address(this)
        );
        keys[2] = getSingleKey(
            KeyType.KYC,
            KeyValueType.CONTRACT_ID,
            address(this)
        );
        token.tokenKeys = keys;

        (int rc, address created) = createNonFungibleToken(token);
        require(rc == HederaResponseCodes.SUCCESS, "HTS: create NFT failed");
        tokenAddress = created;

        // KYC the treasury so it may receive and operate on NFTs when KYC is enforced
        int rcTreasuryKyc = grantTokenKyc(tokenAddress, address(this));
        require(
            rcTreasuryKyc == HederaResponseCodes.SUCCESS,
            "HTS: self KYC failed"
        );

        emit NFTCollectionCreated(created);
    }
    ...
}

How It Works

Define Token Details – Provide name and symbol.
Set Keys – We generate three token keys:
- AdminKey: Grants permission to update token-level properties later.
- SupplyKey: Permits minting and burning of tokens.
- KYCKey: Allows the contract (acting as the KYC authority) to grant or revoke KYC on specific accounts.
Create the NFT – Call the HTS System Contract's createNonFungibleToken function from within the contract. If successful, store the resulting HTS token address in tokenAddress.

We call createNFTCollection(...) and expect it to emit an NFTCollectionCreated event with a valid token address.

Step 2. Minting and Burning an NFT

The previous tutorial covered minting and burning NFTs. Nothing's changed in the code as it's the same as before.

Step 3. Granting KYC

Let's update our contract by:

Adding a new function grantKYC to enable KYC for a specific account. If a token is configured to enforce KYC, that account must be “granted” KYC before it can receive or send the token.
We will also define a new event KYCGranted to go along with it.

Key Code Snippet:

contracts/MyHTSTokenKYC.sol

contract MyHTSTokenKYC is HederaTokenService, KeyHelper, Ownable {
    ...
    event KYCGranted(address account);
    ...    
    function grantKYC(address account) external {
        require(tokenAddress != address(0), "HTS: not created");
        int response = grantTokenKyc(tokenAddress, account);
        require(response == HederaResponseCodes.SUCCESS, "HTS: grant KYC failed");
        emit KYCGranted(account);
    }
    ...
}

Without this step, the account won’t be able to receive or transact the NFT.

Step 4. Revoking KYC

Let's update our contract by:

Adding a new function revokeKYC to disable KYC for a specific account. After revocation, that account can no longer receive or transfer the token.
We will also define a new event KYCRevoked to go along with it.

contracts/MyHTSTokenKYC.sol

contract MyHTSTokenKYC is HederaTokenService, KeyHelper, Ownable {
    ...
    event KYCRevoked(address account);
    ...    
    function revokeKYC(address account) external {
        require(tokenAddress != address(0), "HTS: not created");
        int response = revokeTokenKyc(tokenAddress, account);
        require(
            response == HederaResponseCodes.SUCCESS ||
                response ==
                HederaResponseCodes.ACCOUNT_KYC_NOT_GRANTED_FOR_TOKEN,
            "HTS: revoke KYC failed"
        );
        emit KYCRevoked(account);
    }
    ...
}

Step 5. Updating the KYC Key

Let's update our contract by:

Adding a new function updateKYCKey to change the KYC key on the token. This could be a “key rotation” to maintain compliance or to assign another entity control over KYC status.
We will also define a new event KYCKeyUpdated to go along with it.

contracts/MyHTSTokenKYC.sol

contract MyHTSTokenKYC is HederaTokenService, KeyHelper, Ownable {
    ...
    event KYCKeyUpdated(bytes newKey);
    ...    
    function updateKYCKey(bytes memory newKYCKey) external onlyOwner {
        require(tokenAddress != address(0), "HTS: not created");

        // Create a new TokenKey array with just the KYC key
        IHederaTokenService.TokenKey[]
            memory keys = new IHederaTokenService.TokenKey[](1);
        keys[0] = getSingleKey(KeyType.KYC, KeyValueType.SECP256K1, newKYCKey);

        int responseCode = updateTokenKeys(tokenAddress, keys);
        require(
            responseCode == HederaResponseCodes.SUCCESS,
            "HTS: update KYC key failed"
        );

        emit KYCKeyUpdated(newKYCKey);
    }
    ...
}

After this key rotation, the contract's key is no longer able to perform KYC operations. In the snippet above, we immediately demonstrate that KYC attempts signed by the contract itself will revert.

Account 1 will now be able to grant/revoke KYC using the SDK.

Here's the complete contract code for MyHTSTokenKYC.sol:

contracts/MyHTSTokenKYC.sol

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.28;

// Admin/ownership like the OZ example
import {Ownable} from "@openzeppelin/contracts/access/Ownable.sol";
// Read/transfer via ERC721 facade exposed at the HTS token EVM address
import {IERC721} from "@openzeppelin/contracts/interfaces/IERC721.sol";

// Hedera HTS system contracts (as in your setup)
// Hedera HTS system contracts (v1, NOT v2)
import {HederaTokenService} from "@hashgraph/smart-contracts/contracts/system-contracts/hedera-token-service/HederaTokenService.sol";
import {IHederaTokenService} from "@hashgraph/smart-contracts/contracts/system-contracts/hedera-token-service/IHederaTokenService.sol";
import {HederaResponseCodes} from "@hashgraph/smart-contracts/contracts/system-contracts/HederaResponseCodes.sol";
import {KeyHelper} from "@hashgraph/smart-contracts/contracts/system-contracts/hedera-token-service/KeyHelper.sol";

/**
 * HTS-backed ERC721-like collection:
 * - Creates the HTS NFT collection in the constructor (like deploying an ERC721).
 * - SUPPLY key = this contract (mint/burn only via contract).
 * - ADMIN key  = this contract (admin updates only via contract).
 * - KYC key    = this contract (KYC management via contract).
 * - Holders use the token’s ERC721 facade directly (SDK or EVM).
 */
contract MyHTSTokenKYC is HederaTokenService, KeyHelper, Ownable {
    // Underlying HTS NFT token EVM address (set during initialize. This is the "ERC721-like" token)
    address public tokenAddress;

    // Cosmetic copies for convenience (optional)
    string public name;
    string public symbol;

    // Small non-empty default metadata for simple mints (<=100 bytes as per HTS limit)
    bytes private constant DEFAULT_METADATA = hex"01";
    uint256 private constant INT64_MAX = 0x7fffffffffffffff;

    event NFTCollectionCreated(address indexed token);
    event NFTMinted(
        address indexed to,
        uint256 indexed tokenId,
        int64 newTotalSupply
    );
    event NFTBurned(uint256 indexed tokenId, int64 newTotalSupply);
    event KYCGranted(address account);
    event KYCRevoked(address account);
    event KYCKeyUpdated(bytes newKey);
    event HBARReceived(address indexed from, uint256 amount);
    event HBARFallback(address sender, uint256 amount, bytes data);
    event HBARWithdrawn(address indexed to, uint256 amount);

    /**
     * Constructor sets ownership.
     * Actual HTS token creation happens in createNFTCollection().
     */
    constructor() Ownable(msg.sender) {}

    /**
     * Creates the HTS NFT collection with custom fees.
     * Can be called exactly once by the owner after deployment.
     *
     * @param _name         Token/collection name
     * @param _symbol       Token/collection symbol
     */
    function createNFTCollection(
        string memory _name,
        string memory _symbol
    ) external payable onlyOwner {
        require(tokenAddress == address(0), "Already initialized");

        name = _name;
        symbol = _symbol;

        // Build token definition
        IHederaTokenService.HederaToken memory token;
        token.name = name;
        token.symbol = symbol;
        token.treasury = address(this);
        token.memo = "";

        // Keys: SUPPLY + ADMIN + KYC -> contractId
        IHederaTokenService.TokenKey[]
            memory keys = new IHederaTokenService.TokenKey[](3);
        keys[0] = getSingleKey(
            KeyType.SUPPLY,
            KeyValueType.CONTRACT_ID,
            address(this)
        );
        keys[1] = getSingleKey(
            KeyType.ADMIN,
            KeyValueType.CONTRACT_ID,
            address(this)
        );
        keys[2] = getSingleKey(
            KeyType.KYC,
            KeyValueType.CONTRACT_ID,
            address(this)
        );
        token.tokenKeys = keys;

        (int rc, address created) = createNonFungibleToken(token);
        require(rc == HederaResponseCodes.SUCCESS, "HTS: create NFT failed");
        tokenAddress = created;

        // KYC the treasury so it may receive and operate on NFTs when KYC is enforced
        int rcTreasuryKyc = grantTokenKyc(tokenAddress, address(this));
        require(
            rcTreasuryKyc == HederaResponseCodes.SUCCESS,
            "HTS: self KYC failed"
        );

        emit NFTCollectionCreated(created);
    }

    // ---------------------------------------------------------------------------
    // ERC721-like minting (admin via Ownable + SUPPLY key on contract)
    // ---------------------------------------------------------------------------

    // Minimal API parity: mintNFT(to) onlyOwner -> returns new tokenId (serial)
    function mintNFT(address to) public onlyOwner returns (uint256) {
        return _mintAndSend(to, DEFAULT_METADATA);
    }

    // Optional overload with custom metadata (<= 100 bytes)
    function mintNFT(
        address to,
        bytes memory metadata
    ) public onlyOwner returns (uint256) {
        require(metadata.length <= 100, "HTS: metadata >100 bytes");
        return _mintAndSend(to, metadata);
    }

    function _mintAndSend(
        address to,
        bytes memory metadata
    ) internal returns (uint256 tokenId) {
        require(tokenAddress != address(0), "HTS: not created");

        // 1) Mint to treasury (this contract)
        bytes[] memory arr = new bytes[](1);
        arr[0] = metadata;
        (int rc, int64 newTotalSupply, int64[] memory serials) = mintToken(
            tokenAddress,
            0,
            arr
        );
        require(
            rc == HederaResponseCodes.SUCCESS && serials.length == 1,
            "HTS: mint failed"
        );

        // 2) Transfer from treasury -> recipient via ERC721 facade
        uint256 serial = uint256(uint64(serials[0]));
        // Recipient must be associated (or have auto-association available)
        IERC721(tokenAddress).transferFrom(address(this), to, serial);

        emit NFTMinted(to, serial, newTotalSupply);
        return serial;
    }

    // ---------------------------------------------------------------------------
    // ERC721Burnable-like flow for holders
    // ---------------------------------------------------------------------------

    // Holder-initiated burn:
    // - User approves this contract for tokenId (approve or setApprovalForAll)
    // - Calls burn(tokenId); contract pulls to treasury and burns via HTS
    // Allows onlyOwner to burn when the NFT is already in treasury,
    // avoiding the need for ERC721 approvals in that case.
    function burnNFT(uint256 tokenId) external {
        require(tokenAddress != address(0), "HTS: not created");

        address owner_ = IERC721(tokenAddress).ownerOf(tokenId);

        // Match ERC721Burnable semantics: only the token owner or an approved operator may trigger burn
        require(
            msg.sender == owner_ ||
                IERC721(tokenAddress).getApproved(tokenId) == msg.sender ||
                IERC721(tokenAddress).isApprovedForAll(owner_, msg.sender),
            "caller not owner nor approved"
        );

        // If not already in treasury, ensure this contract is approved to pull the token and then pull it
        if (owner_ != address(this)) {
            bool contractApproved = IERC721(tokenAddress).getApproved(
                tokenId
            ) ==
                address(this) ||
                IERC721(tokenAddress).isApprovedForAll(owner_, address(this));
            require(contractApproved, "contract not approved to transfer");
            IERC721(tokenAddress).transferFrom(owner_, address(this), tokenId);
        }

        // Burn via HTS (requires token to be in treasury)
        int64[] memory serials = new int64[](1);
        serials[0] = _toI64(tokenId);
        (int rc, int64 newTotalSupply) = burnToken(tokenAddress, 0, serials);
        require(rc == HederaResponseCodes.SUCCESS, "HTS: burn failed");

        emit NFTBurned(tokenId, newTotalSupply);
    }
    function grantKYC(address account) external {
        require(tokenAddress != address(0), "HTS: not created");
        int response = grantTokenKyc(tokenAddress, account);
        require(
            response == HederaResponseCodes.SUCCESS,
            "HTS: grant KYC failed"
        );
        emit KYCGranted(account);
    }

    function revokeKYC(address account) external {
        require(tokenAddress != address(0), "HTS: not created");
        int response = revokeTokenKyc(tokenAddress, account);
        require(
            response == HederaResponseCodes.SUCCESS ||
                response ==
                HederaResponseCodes.ACCOUNT_KYC_NOT_GRANTED_FOR_TOKEN,
            "HTS: revoke KYC failed"
        );
        emit KYCRevoked(account);
    }

    function updateKYCKey(bytes memory newKYCKey) external onlyOwner {
        require(tokenAddress != address(0), "HTS: not created");

        // Create a new TokenKey array with just the KYC key
        IHederaTokenService.TokenKey[]
            memory keys = new IHederaTokenService.TokenKey[](1);
        keys[0] = getSingleKey(KeyType.KYC, KeyValueType.SECP256K1, newKYCKey);

        int responseCode = updateTokenKeys(tokenAddress, keys);
        require(
            responseCode == HederaResponseCodes.SUCCESS,
            "HTS: update KYC key failed"
        );

        emit KYCKeyUpdated(newKYCKey);
    }

    // ---------------------------------------------------------------------------
    // HBAR handling
    // ---------------------------------------------------------------------------

    // Accept HBAR
    receive() external payable {
        emit HBARReceived(msg.sender, msg.value);
    }

    fallback() external payable {
        emit HBARFallback(msg.sender, msg.value, msg.data);
    }

    function withdrawHBAR() external onlyOwner {
        uint256 balance = address(this).balance;
        require(balance > 0, "No HBAR to withdraw");
        (bool success, ) = owner().call{value: balance}("");
        require(success, "Failed to withdraw HBAR");
        emit HBARWithdrawn(owner(), balance);
    }

    // --------------------- internal helpers ---------------------
    function _toI64(uint256 x) internal pure returns (int64) {
        require(x <= INT64_MAX, "cast: > int64.max");
        return int64(uint64(x));
    }
}

Step 6: Deploy Your HTS KYC Enabled NFT Smart Contract

Create a deployment script (deployKYC.ts) in scripts directory:

scripts/deployKYC.ts

import { network } from "hardhat";

const { ethers } = await network.connect({ network: "testnet" });

async function main() {
  const [deployer] = await ethers.getSigners();
  console.log("Deploying contract with the account:", deployer.address);

  // 1) Deploy the wrapper contract
  // The deployer will also be the owner of our NFT contract
  const MyHTSTokenKYC = await ethers.getContractFactory(
    "MyHTSTokenKYC",
    deployer
  );
  const contract = await MyHTSTokenKYC.deploy();
  await contract.waitForDeployment();

  // 2) Create the HTS NFT collection by calling createNFTCollection()
  //    NOTE: createNFTCollection() must be payable to accept this value.
  const NAME = "MyHTSTokenKYCNFTCollection";
  const SYMBOL = "MHT";
  const HBAR_TO_SEND = "15"; // HBAR to send with createNFTCollection()
  console.log(
    `Calling createNFTCollection() with ${HBAR_TO_SEND} HBAR to create the HTS collection...`
  );
  const tx = await contract.createNFTCollection(NAME, SYMBOL, {
    gasLimit: 350_000,
    value: ethers.parseEther(HBAR_TO_SEND)
  });
  await tx.wait();
  console.log("createNFTCollection() tx hash:", tx.hash);

  // 3) Read the created HTS token address
  const contractAddress = await contract.getAddress();
  console.log("MyHTSTokenKYC contract deployed at:", contractAddress);
  const tokenAddress = await contract.tokenAddress();
  console.log(
    "Underlying HTS KYC NFT Collection (ERC721 facade) address:",
    tokenAddress
  );
}

main().catch(console.error);

In this script, we first retrieve your account (the deployer) using Ethers.js. This account will own the deployed smart contract. Next, we use this account to deploy the contract by calling MyHTSTokenKYC.deploy().

Note

For most HTS System Smart Contract calls, an HBAR value is not required to be sent in the contract call; the gas fee will cover it. However, for expensive transactions, like Create HTS NFT Collection, the gas fee is reduced, and the transaction cost is covered by the payable amount. This is to reduce the gas consumed by the contract call.

Deploy your contract by executing the script:

npx hardhat run scripts/deployKYC.ts --network testnet

Copy the deployed address—you'll need this in subsequent steps.

The output looks like this:

Deploying contract with the account: 0xA98556A4deeB07f21f8a66093989078eF86faa30
Calling createNFTCollection() with 15 HBAR to create the HTS collection...
createNFTCollection() tx hash: 0x0e279272b7c9de310ea7fd235755177214dfd2489d9cce83a723eb14e97dc58a
MyHTSTokenKYC contract deployed at: 0xe162146963C77CaC223a5D0f6DeFb7035fF7075D
Underlying HTS KYC NFT Collection (ERC721 facade) address: 0x000000000000000000000000000000000068D4f2

Step 7: Minting an HTS NFT with KYC

Create a mintNFTKYC.ts script in your scripts directory to mint an NFT. Don't forget to replace the <your-contract-address> with the address you've just copied.

scripts/mintNFTKYC.ts

import { network } from "hardhat";

const { ethers } = await network.connect({ network: "testnet" });

async function main() {
  const [signer] = await ethers.getSigners();
  console.log("Using signer:", signer.address);

  const contractAddress = "<your-contract-address>";
  const recipient = signer.address;

  const myHTSTokenKYCContract = await ethers.getContractAt(
    "MyHTSTokenKYC",
    contractAddress,
    signer
  );

  // Display the underlying HTS token address
  const tokenAddress = await myHTSTokenKYCContract.tokenAddress();
  console.log("HTS ERC721 facade address:", tokenAddress);

  // 1) Associate the signer via token.associate() (EOA -> token contract)
  const tokenAssociateAbi = ["function associate()"];
  const token = new ethers.Contract(tokenAddress, tokenAssociateAbi, signer);
  console.log("Associating signer to token via token.associate() ...");
  const assocTx = await token.associate({ gasLimit: 800_000 });
  await assocTx.wait();
  console.log("Associate tx hash:", assocTx.hash);

  // 2) Grant KYC to the recipient via wrapper (wrapper holds KYC key)
  try {
    console.log(`Granting KYC to ${recipient} ...`);
    const grantTx = await myHTSTokenKYCContract.grantKYC(recipient, {
      gasLimit: 75_000
    });
    await grantTx.wait();
    console.log("Grant KYC tx hash:", grantTx.hash);
  } catch (e: any) {
    console.warn(
      "Grant KYC failed (ensure wrapper still holds KYC key):",
      e?.message || e
    );
    throw e;
  }

  // 3) Prepare metadata (<= 100 bytes)
  const metadata = ethers.hexlify(
    ethers.toUtf8Bytes(
      "ipfs://bafkreibr7cyxmy4iyckmlyzige4ywccyygomwrcn4ldcldacw3nxe3ikgq"
    )
  );
  const byteLen = ethers.getBytes(metadata).length;
  if (byteLen > 100) {
    throw new Error(
      `Metadata is ${byteLen} bytes; must be <= 100 bytes for HTS`
    );
  }

  // 4) Mint to recipient
  console.log(`Minting NFT to ${recipient} with metadata: ${metadata} ...`);
  // Note: Our mintNFT function is overloaded; we must use this syntax to disambiguate
  // or we get a typescript error.
  const tx = await myHTSTokenKYCContract["mintNFT(address,bytes)"](
    recipient,
    metadata,
    {
      gasLimit: 400_000
    }
  );
  await tx.wait();
  console.log("Mint tx hash:", tx.hash);

  // Check recipient's NFT balance on the ERC721 facade (not on MyHTSTokenKYC)
  const erc721 = new ethers.Contract(
    tokenAddress,
    ["function balanceOf(address owner) view returns (uint256)"],
    signer
  );
  const balance = (await erc721.balanceOf(recipient)) as bigint;
  console.log("Balance:", balance.toString(), "NFTs");
}

main().catch(console.error);

How It Works

Connects to Hedera testnet, gets the first signer, and attaches to your deployed MyHTSTokenKYC contract.
Reads the underlying HTS ERC721 facade address (tokenAddress) from the contract.
Associates the signer via token.associate()(EOA -> token contract)
Grant KYC to the recipient
Constructs <=100-byte UTF-8 metadata and calls mintNFT(recipient, metadata), then waits for the transaction receipt.
Mints NFT to recipient
Queries balanceOf(recipient) on the ERC721 facade and logs the current NFT count.

The code mints a new NFT to your account ( signer.address ). Then we verify the balance to see if we own an HTS NFT.

Mint an NFT:

npx hardhat run scripts/mintNFTKYC.ts --network testnet

Expected output:

Using signer: 0xA98556A4deeB07f21f8a66093989078eF86faa30
HTS ERC721 facade address: 0x000000000000000000000000000000000068D4f2
Associating signer to token via token.associate() ...
Associate tx hash: 0xce72afe465d89bf5788697c3185e1f289957cd51e6e1f28994ce1b9bc629d47d
Granting KYC to 0xA98556A4deeB07f21f8a66093989078eF86faa30 ...
Grant KYC tx hash: 0x54b604035edfc1aed19336a33a08156d39862ddd6e6d68f5062c038e34e9a574
Minting NFT to 0xA98556A4deeB07f21f8a66093989078eF86faa30 with metadata: 0x697066733a2f2f6261666b7265696272376379786d79346979636b6d6c797a69676534797763637979676f6d7772636e346c64636c64616377336e786533696b6771 ...
Mint tx hash: 0x1c7f02fb63b6b6add6ebab11bc5137d8289e7ec7576b2b1e394b864b49777a7e
Balance: 1 NFTs

Step 8: Burning an HTS NFT

Create a burn script (burnNFTKYC.ts ) in your scripts directory. Make sure to replace <your-contract-address> to the MyHTSToken contract address you got from deploying and replace <your-token-id> with the tokenId you want to burn(eg. "1") :

scripts/burnNFTKYC.ts

import { network } from "hardhat";
import type { ContractTransactionResponse } from "ethers";

const { ethers } = await network.connect({ network: "testnet" });

async function main() {
  const [signer] = await ethers.getSigners();
  console.log("Using signer:", signer.address);

  const contractAddress = "<your-contract-address>";
  const tokenId = BigInt("<your-token-id>");

  const myHTSTokenKYCContract = await ethers.getContractAt(
    "MyHTSTokenKYC",
    contractAddress,
    signer
  );

  const tokenAddress: string = await myHTSTokenKYCContract.tokenAddress();
  console.log("HTS ERC721 facade address:", tokenAddress);

  // Minimal ERC721 ABI for approvals and balance
  const erc721 = new ethers.Contract(
    tokenAddress,
    [
      "function approve(address to, uint256 tokenId) external",
      "function getApproved(uint256 tokenId) external view returns (address)",
      "function ownerOf(uint256 tokenId) external view returns (address)",
      "function balanceOf(address owner) external view returns (uint256)"
    ],
    signer
  );

  const ownerOfToken: string = await erc721.ownerOf(tokenId);
  console.log("Current owner of token:", ownerOfToken);

  // Check if already approved for this tokenId; if not, approve MyHTSTokenKYC contract
  const currentApproved: string = await erc721.getApproved(tokenId);
  if (currentApproved.toLowerCase() !== contractAddress.toLowerCase()) {
    console.log(
      `Approving MyHTSTokenKYC contract ${contractAddress} for tokenId ${tokenId.toString()}...`
    );
    const approveTx = (await erc721.approve(
      contractAddress,
      tokenId
    )) as unknown as ContractTransactionResponse;
    await approveTx.wait();
    console.log("Approval tx hash:", approveTx.hash);
  } else {
    console.log("MyHTSTokenKYC contract is already approved for this tokenId.");
  }

  // Burn via MyHTSTokenKYC
  console.log(`Burning tokenId ${tokenId.toString()}...`);
  const burnTx = (await myHTSTokenKYCContract.burnNFT(tokenId, {
    gasLimit: 200_000
  })) as unknown as ContractTransactionResponse;
  await burnTx.wait();
  console.log("Burn tx hash:", burnTx.hash);

  // Show caller's balance after burn
  const balanceAfter = (await erc721.balanceOf(signer.address)) as bigint;
  console.log("Balance after burn:", balanceAfter.toString(), "NFTs");
}

main().catch(console.error);

How It Works

Connects to Hedera testnet, gets the signer, attaches to MyHTSTokenKYC, and reads the ERC721 facade tokenAddress.
Checks token ownership and existing approval; if needed, approves the MyHTSTokenKYC contract for the specific tokenId.
Calls burnNFT(tokenId) on MyHTSTokenKYC and waits for the transaction receipt.
Reads and logs the signer’s NFT balance from the ERC721 facade after the burn.

The script will burn the HTS NFT with the ID set to 1, which is the HTS NFT you've just minted. To be sure the token has been deleted, let's print the balance for our account to the terminal. The balance should show a balance of 0.

Burn the NFT:

npx hardhat run scripts/burnNFTKYC.ts --network testnet

You should get an output similar to:

Using signer: 0xA98556A4deeB07f21f8a66093989078eF86faa30
HTS ERC721 facade address: 0x000000000000000000000000000000000068D4f2
Current owner of token: 0xA98556A4deeB07f21f8a66093989078eF86faa30
Approving MyHTSTokenKYC contract 0xe162146963C77CaC223a5D0f6DeFb7035fF7075D for tokenId 1...
Approval tx hash: 0x93b20306e6699e07c642721a7aa935c580f4f43ff1f39d87ca80b4c42de282af
Burning tokenId 1...
Burn tx hash: 0x8b6eb2e8cbb485636569859d8a839dc2a345a4dca0660a4ec9e52edabdc4777f
Balance after burn: 0 NFTs

Congratulations! 🎉 You have successfully learned how to deploy an HTS NFT collection smart contract using Hardhat, OpenZeppelin, and Ethers. Feel free to reach out in Discord!

Step 9: Run tests(Optional)

You can find both types of tests in the Hedera-Code-Snippets repository. You will find the following files:You can find both types of tests in the Hedera-Code-Snippets repository. You will find the following files:

contracts/MyHTSTokenKYC.t.sol

Ownership and access control: Ensures the constructor sets the correct owner and enforces onlyOwner for createNFTCollection and updateKYCKey (non-owners revert with OwnableUnauthorizedAccount).
Pre-creation guards: Confirms HTS-dependent functions (mint, burn, grantKYC, revokeKYC, updateKYCKey) revert with "HTS: not created" before the collection is created.
HBAR handling: Verifies the contract can receive HBAR (HBARReceived event), blocks non-owner withdrawals, and allows the owner to withdraw all HBAR (HBARWithdrawn event) leaving the contract balance at zero.

test/MyHTSTokenKYC.ts

Deployment and setup: Deploys the KYC wrapper, creates the HTS NFT collection (with KYC key), and retrieves the ERC721 facade address.
KYC enforcement before mint: Validates that minting reverts when KYC has not been granted to the recipient.
Association + KYC + mint: Associates the signer via token.associate(), grants KYC via the wrapper, then mints and extracts the tokenId from the wrapper’s NFTMinted event.
Burn flow: Approves the wrapper for the minted token if needed and burns it via the wrapper; confirms the operation by checking the signer’s ERC721 balance.
KYC key rotation and effect: Derives the signer’s compressed public key on-chain and updates the KYC key; verifies subsequent grantKYC calls fail since the wrapper no longer holds the KYC key.

Copy these files and then run the tests:

# This will run the tests via hardhat
npx hardhat test solidity 
# This will run the tests via hedera testnet as the precompiles 
# are not available on hardhat locally and we must use the testnet
npx hardhat test mocha

You can also run both the solidity and mocha tests altogether:

npx hardhat test

Token Association in the Tests

Because we’re using a hybrid approach of EVM and the Native Hedera Token Service, you’ll see special logic to:

Associate the newly created token with the signer’s account.
Grant KYC to the account
Mint NFT to the account

This is due to a nuance: In order to grant KYC to an account, it must have the token associated with it. This is the case even if the account has unlimited auto associations.

Conclusion

Using a Solidity Smart Contract on Hedera, you can replicate many of the native HTS functionalities—granting and revoking KYC, updating token keys, minting and transferring NFTs—while retaining the benefit of contract-driven logic and on-chain state. This approach may be preferable if:

You want advanced business logic in a self-contained contract.
You prefer standard Solidity patterns and tooling for your Web3 workflows.
You plan to modularize or integrate your token behavior with other smart contracts.

Check out Part 3: How to Pause, Freeze, Wipe, and Delete NFTs to learn more about configuring Native Tokens with Smart Contracts.

HTS x EVM - How to Pause, Freeze, Wipe, and Delete NFTs (Part 3)

Additional Resources

Check out our GitHub repo to find the full contract and Hardhat test scripts, along with the configuration files you need to deploy and test on Hedera!