diff --git a/v3loc.go b/v3loc.go
new file mode 100644
index 0000000..fc05913
--- /dev/null
+++ b/v3loc.go
@@ -0,0 +1,182 @@
+package paseto
+
+import (
+	"crypto/aes"
+	"crypto/cipher"
+	"crypto/hmac"
+	"crypto/rand"
+	"crypto/sha512"
+	"crypto/subtle"
+	"errors"
+	"fmt"
+	"io"
+	"strings"
+
+	"golang.org/x/crypto/hkdf"
+)
+
+const (
+	v3locHeader = "v3.local."
+	v3locNonce  = 32
+	v3locKey    = 32
+	v3locMac    = 48
+	v3locKDF    = 48
+)
+
+func V3Encrypt(key []byte, payload, footer any, implicit string, randBytes []byte) (string, error) {
+	payloadBytes, err := toBytes(payload)
+	if err != nil {
+		return "", fmt.Errorf("encode payload: %w", err)
+	}
+
+	footerBytes, err := toBytes(footer)
+	if err != nil {
+		return "", fmt.Errorf("encode footer: %w", err)
+	}
+
+	// step 0.
+	m := payloadBytes
+	k := key
+	f := footerBytes
+	i := []byte(implicit)
+
+	// step 1.
+	if subtle.ConstantTimeEq(int32(len(k)), v3locKey) != 1 {
+		return "", errors.New("bad key")
+	}
+
+	// step 2.
+	h := []byte(v3locHeader)
+
+	// step 3.
+	n := randBytes
+	if n == nil {
+		n = make([]byte, v3locNonce)
+		if _, err := io.ReadFull(rand.Reader, n); err != nil {
+			return "", fmt.Errorf("read from crypto/rand.Reader: %w", err)
+		}
+	}
+
+	// step 4.
+	ek, n2, ak, err := v3locSplitKey(key, n)
+	if err != nil {
+		return "", fmt.Errorf("create enc and auth keys: %w", err)
+	}
+
+	// step 5.
+	block, err := aes.NewCipher(ek)
+	if err != nil {
+		return "", fmt.Errorf("create aes cipher: %w", err)
+	}
+	c := make([]byte, len(m))
+	ciph := cipher.NewCTR(block, n2)
+	ciph.XORKeyStream(c, m)
+
+	// step 6.
+	preAuth := pae(h, n, c, f, i)
+
+	// step 7.
+	hasher := hmac.New(sha512.New384, ak)
+	hasher.Write(preAuth)
+	t := hasher.Sum(nil)
+
+	// step 7.
+	body := make([]byte, 0, len(n)+len(c)+len(t))
+	body = append(body, n...)
+	body = append(body, c...)
+	body = append(body, t...)
+
+	return buildToken(h, body, f), nil
+}
+
+func V3Decrypt(token string, key []byte, payload, footer any, implicit string) error {
+	// step 0.
+	m := token
+	k := key
+	i := []byte(implicit)
+
+	// step 1.
+	if subtle.ConstantTimeEq(int32(len(k)), v3locKey) != 1 {
+		return errors.New("bad key")
+	}
+
+	// step 2.
+	// TODO: ?
+
+	// step 3.
+	if !strings.HasPrefix(token, v3locHeader) {
+		return ErrIncorrectTokenFormat
+	}
+	h := []byte(v3locHeader)
+
+	// step 4.
+	body, footerBytes, err := splitToken(m, v3locHeader)
+	if err != nil {
+		return fmt.Errorf("decode token: %w", err)
+	}
+	if len(body) < v3locNonce {
+		return ErrIncorrectTokenFormat
+	}
+	n, c, t, f := body[:v3locNonce], body[v3locNonce:len(body)-32], body[len(body)-32:], footerBytes
+
+	// step 5.
+	ek, n2, ak, err := v3locSplitKey(key, n)
+	if err != nil {
+		return fmt.Errorf("create enc and auth keys: %w", err)
+	}
+
+	// step 6.
+	preAuth := pae(h, n, c, f, i)
+
+	// step 7.
+	hasher := hmac.New(sha512.New384, ak)
+	hasher.Write(preAuth)
+	t2 := hasher.Sum(nil)
+
+	// step 8.
+	if !hmac.Equal(t, t2) {
+		return ErrInvalidTokenAuth
+	}
+
+	// step 9.
+	block, err := aes.NewCipher(ek)
+	if err != nil {
+		return fmt.Errorf("create aes cipher: %w", err)
+	}
+
+	p := make([]byte, len(c))
+	ciph := cipher.NewCTR(block, n2)
+	ciph.XORKeyStream(p, c)
+
+	// step 7.
+	if payload != nil {
+		if err := fromBytes(p, payload); err != nil {
+			return fmt.Errorf("decode payload: %w", err)
+		}
+	}
+
+	if footer != nil {
+		if err := fromBytes(f, footer); err != nil {
+			return fmt.Errorf("decode footer: %w", err)
+		}
+	}
+	return nil
+}
+
+func v3locSplitKey(key, n []byte) (ek, ak, n2 []byte, err error) {
+	eKDF := hkdf.New(sha512.New384, key, nil, append([]byte("paseto-encryption-key"), n...))
+	aKDF := hkdf.New(sha512.New384, key, nil, append([]byte("paseto-auth-key-for-aead"), n...))
+
+	tmp := make([]byte, v3locKDF)
+	if _, err := io.ReadFull(eKDF, tmp); err != nil {
+		return nil, nil, nil, fmt.Errorf("unable to generate encryption key from seed: %w", err)
+	}
+
+	ek, n2 = tmp[:v3locKey], tmp[v3locKey:]
+
+	ak = make([]byte, v3locKDF)
+	if _, err := io.ReadFull(aKDF, ak); err != nil {
+		return nil, nil, nil, fmt.Errorf("unable to generate authentication key from seed: %w", err)
+	}
+	return ek, n2, ak, nil
+}
diff --git a/v3loc_test.go b/v3loc_test.go
new file mode 100644
index 0000000..7e79448
--- /dev/null
+++ b/v3loc_test.go
@@ -0,0 +1,52 @@
+package paseto
+
+import (
+	"encoding/hex"
+	"strings"
+	"testing"
+)
+
+func TestV3Loc_Encrypt(t *testing.T) {
+	t.Skip()
+	testCases := loadGoldenFile("testdata/v3.json")
+
+	for _, tc := range testCases.Tests {
+		if tc.Key == "" || !strings.HasPrefix(tc.Token, v3locHeader) {
+			continue
+		}
+
+		t.Run(tc.Name, func(t *testing.T) {
+			key := mustHex(tc.Key)
+			payload := mustJSON(tc.Payload)
+			footer := mustJSON(tc.Footer)
+			imp := tc.ImplicitAssertion
+			nonce := mustHex(tc.Nonce)
+
+			token, err := V3Encrypt(key, payload, footer, imp, nonce)
+			if err != nil {
+				t.Fatal(err)
+			}
+			mustEqual(t, token, tc.Token)
+		})
+	}
+}
+
+func TestV3Loc_Decrypt(t *testing.T) {
+	t.Skip()
+	testCases := loadGoldenFile("testdata/v3.json")
+
+	for _, tc := range testCases.Tests {
+		if tc.Key == "" || !strings.HasPrefix(tc.Token, v3locHeader) {
+			continue
+		}
+
+		t.Run(tc.Name, func(t *testing.T) {
+			imp := tc.ImplicitAssertion
+			key := must(hex.DecodeString(tc.Key))
+			var payload, footer any
+
+			err := V3Decrypt(tc.Token, key, payload, footer, imp)
+			mustOk(t, err)
+		})
+	}
+}