Cardano gives token issuers power to freeze, seize and restrict assets
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Summary
The Cardano Foundation launched CIP-0113, a new token standard that grants issuers of regulated assets such as stablecoins, funds, and bonds the ability to restrict recipients and freeze, seize, or transfer token holdings based on specified rules. This standard enforces compliance checks, including identity and sanctions screening, on every transfer without requiring a hard fork of the Cardano network.
Why it matters
The development matters because most crypto tokens currently can be transferred freely without restrictions, which is incompatible with regulatory requirements for regulated assets. By embedding compliance checks and transfer restrictions directly into the token, Cardano enables issuers to ensure regulatory compliance onchain, which could facilitate the issuance of regulated financial products.
Key context
Regulated asset issuers must prevent transfers to unauthorized or sanctioned parties and retain powers to freeze or seize assets when ordered by regulators or courts. CIP-0113 achieves this by using a shared smart contract on Cardano to enforce issuer-defined rules on every token movement. The Cardano Foundation highlights that this design requires no network hard fork and allows issuers to update rules as regulations evolve. Similar permissioned token standards exist on Ethereum (ERC-3643), Solana, and the XRP Ledger.
Key numbers and entities
The Cardano Foundation, a Swiss nonprofit, is the issuer of CIP-0113. Wallets and tools supporting the standard include Eternl, GeroWallet, CardanoScan, and BloxBean. Frederik Gregaard is the CEO of the Cardano Foundation. Cardano’s ADA token experienced a 4.5% price drop in the 24 hours prior to the report.
What remains unclear
The source does not provide details on the protocol's adoption rate, how often or by which issuers the permissions and controls have been applied, or specifics about enforcement mechanisms beyond the general description of transfer restrictions and authorized party powers. It also does not elaborate on user or market reactions to the new token standard.