Cardano launches token standard with built-in freeze and seizure powers

The Cardano Foundation said on Wednesday that a token standard giving issuers control over who may receive their assets, and the power to freeze or seize holdings, is now live on the Cardano network following independent security audits. The Swiss nonprofit, which supports the blockchain's development, said the standard is aimed at stablecoins, funds and bonds that must comply with identity checks and sanctions rules.

Most crypto tokens can be sent by any holder to any wallet, an arrangement that banks and fund managers say is incompatible with regulated assets. Under the new standard, known as CIP-0113, the network applies an issuer's rules before a transfer is accepted. The foundation said a fund sold only to verified investors could reject a transfer to a buyer who had not completed identity checks, while a stablecoin issuer could stop its tokens reaching a sanctioned address. Those restrictions apply whenever the tokens move, including between holders using different wallets or services, it said.

"The rules have to travel with the asset and be enforced every time it moves," Frederik Gregaard, chief executive of the Cardano Foundation, said in a statement to CoinDesk. The design keeps tokens in a shared smart contract, a program on Cardano that governs how they can be moved. Issuers can select existing sets of rules or write their own and update them as regulations change, and the foundation said the standard drew on capabilities already available on the network, requiring no hard fork.

The foundation named the wallets Eternl and GeroWallet, the blockchain explorer CardanoScan and the developer-tool provider BloxBean among those supporting the launch. Similar controls exist elsewhere: Ethereum has permissioned token standards such as ERC-3643, Solana added transfer controls through its token extensions, and the XRP Ledger supports tokens whose issuers can restrict holders and claw back balances. Depending on its rules, a holder of such a token may be accepting powers that go beyond blocking a payment, since an authorised party could move tokens without the holder's consent; the specification advises lending services to examine those powers before accepting a token as collateral.

The 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 tokenised shares. Cardano's ADA was down 4.5% over the past 24 hours, alongside a broader market decline.