The Cardano Foundation has introduced a new token framework that empowers creators of bonds, funds, and stablecoins to specify permissible recipients of their assets, as well as lock or confiscate balances when regulatory guidelines dictate.
This Swiss nonprofit organization dedicated to advancing Cardano disclosed on Wednesday that the specification, designated as a Cardano improvement proposal under the name CIP-0113, is now operational on the network following a series of independent security evaluations.
Typical cryptocurrency tokens permit any owner to transfer them freely to an arbitrary wallet destination. Fund administrators and banking institutions bringing compliant assets onto decentralized networks cannot permit such unrestricted movement.
Such entities must block buyers who have skipped identity verification procedures and blacklist prohibited wallet addresses, alongside maintaining the capability to freeze funds whenever mandated by judicial authorities or regulatory bodies.
The newly introduced standard integrates these restrictive mechanisms directly into the token architecture, allowing the blockchain to validate compliance rules prior to executing any transaction.
A fund restricted exclusively to accredited investors might deploy this mechanism to decline a transfer intended for an individual who lacks verified identification credentials. Alternatively, a stablecoin creator could prevent their digital coins from reaching a sanctioned destination. These limitations remain active throughout every transfer instance, encompassing transactions executed across diverse wallets or external services.
This architecture keeps the digital assets within a shared smart contract, representing an application running on Cardano that governs transaction pathways. Nodes verifying network activity validate the designated policy criteria prior to finalizing any transfer. The implementation relies entirely on existing Cardano framework capabilities, thereby bypassing any requirement for a hard fork or foundational protocol modification.
Frederik Gregaard, chief executive officer at the Cardano Foundation, noted in a statement provided to CoinDesk that compliance mandates must travel alongside the underlying asset and undergo validation during every transaction.
Issuers retain the flexibility to choose pre-existing policy templates or author custom parameters, modifying them dynamically as regulatory frameworks evolve. The foundation acknowledged several ecosystem applications supporting this rollout, including the Eternl and GeroWallet crypto wallets, the CardanoScan blockchain explorer, and BloxBean as a developer tool provider.
Alternative distributed ledgers already support comparable features. Ethereum features permissioned token specifications such as ERC-3643, Solana incorporates transfer governance via specialized token extensions, and the XRP Ledger facilitates assets whose creators can enforce holder constraints and claw back balances.
Possessing these types of tokens may concurrently imply accepting authority that exceeds simple payment restriction. Depending on the governing parameters, designated administrative entities can shift assets without receiving explicit approval from the token holder. The technical specifications explicitly advise lending platforms to thoroughly review these embedded authorities before accepting any such token as collateral.
Furthermore, the foundation highlighted recognition under the certification criteria established by the Capital Markets and Technology Association, an industry group in Switzerland whose benchmarks govern tokenized equity issuance.
The price of Cardano’s native token, ADA, experienced a 4.5% decline over the preceding 24-hour period amidst a broader market downturn.
Originally published at https://www.coindesk.com/tech/2026/10/07/cardano-gives-token-issuers-power-to-freeze-seize-and-restrict-assets.
