The Cardano Foundation has launched CIP-0113, a token standard designed to give issuers of regulated stablecoins, funds and bonds the ability to control who can receive their assets and freeze or seize holdings when regulatory requirements demand it.
The standard, announced Wednesday following independent security audits, enforces compliance checks on every transfer, including identity and sanctions screening. It requires no hard fork of the Cardano network and keeps tokens in a shared smart contract that validates rules before accepting any transfer.
How It Works
Most cryptocurrency tokens can be sent by any holder to any wallet address. Regulated assets require different controls. Financial institutions need to prevent transfers to buyers who have not completed identity verification, block payments to sanctioned addresses, and freeze assets when regulators or courts order it.
CIP-0113 builds these restrictions directly into the token itself. A fund sold only to verified investors could reject transfers to unvetted buyers. A stablecoin issuer could prevent its tokens from reaching sanctioned addresses. These restrictions apply whenever tokens move, including transfers between holders using different wallets or services.
Issuer Flexibility
Issuers can select existing rule sets or create custom ones, and update them as regulations change. "The rules have to travel with the asset and be enforced every time it moves," said Frederik Gregaard, chief executive of the Cardano Foundation.
The foundation named Eternl and GeroWallet, CardanoScan blockchain explorer, and BloxBean among tools supporting the launch.
Holder Considerations
Holders of these tokens may be subject to controls beyond payment blocking. Depending on a token's rules, authorized parties could move holdings without the holder's consent. The technical specification advises lending services to examine these powers before accepting such tokens as collateral.
Broader Context
Other blockchains already offer similar functionality. Ethereum supports permissioned token standards such as ERC-3643, Solana added transfer controls through token extensions, and the XRP Ledger supports tokens with issuer-controlled restrictions and clawback capabilities.
The Cardano Foundation also announced recognition under the certification framework of the Capital Markets and Technology Association, a Swiss industry body whose standards are used for issuing tokenized shares.
