The Cardano Foundation has introduced CIP-0113, a fresh token standard empowering issuers of regulated assets to oversee transfers and execute freezes or seizures according to rules linked directly to the tokens.
Announced on Oct. 7, this framework is designed for tokenized funds, bonds, and stablecoins. It permits issuers to mandate identity verifications, restrict unauthorized recipients, and block sanctioned addresses. These mechanisms apply exclusively to tokens created via the framework, rather than to ADA or all pre-existing Cardano tokens.
Cardano Token Issuers Can Set Transfer Rules
With CIP-0113, issuers have the ability to pick controls that align with their asset’s specific compliance needs. For instance, a fund limited strictly to verified investors has the capability to decline transfers directed at recipients lacking completed identity verification.
In a similar fashion, a stablecoin issuer can block transfers connected to addresses featured on a sanctions list. These selected rules stay tethered to the asset whenever holders transfer it across supported services or wallets.
Additionally, issuers can deploy modules that temporarily halt transfers or grant authorized operators the ability to move funds absent the owner’s consent. Such authority relies entirely on the rules chosen for each specific token.
The reference implementation provided by the Foundation encompasses identity checks, forced transfers, seizures, and sanctions restrictions. Rather than concentrating all authority within a single account, issuers can distribute administrative permissions across multiple operators.
“The rules have to travel with the asset and be enforced every time it moves,” remarked Frederik Gregaard, chief executive of the Cardano Foundation.
Furthermore, the technical specification cautions lending platforms to review issuer capabilities prior to accepting programmable tokens as collateral. Any authorized transfer or seizure can directly impact assets locked inside a lending contract.
CIP-0113 Works Without a Network Upgrade
Operating entirely through existing Cardano functionalities, the standard sidesteps the need for a hard fork, which would otherwise alter the fundamental rules of the network. Assets created through this framework continue to function as native Cardano tokens.
A shared smart contract governs their movement. Before any transaction is approved, the network verifies whether the relevant transfer rules are fully satisfied. This introduces compliance validations to ownership transfers that standard native tokens typically execute without restrictions.
Issuers are free to select pre-existing rule modules or build custom ones. They can also modify these modules as regulations evolve, avoiding any need to swap out the underlying CIP-0113 framework.
Among the developer tools, block explorers, and wallets backing the launch, the Foundation highlighted BloxBean, CardanoScan, GeroWallet, and Eternl. Furthermore, the September ecosystem report confirmed completed integrations involving Eternl, GeroWallet, and CardanoScan.
Originating in January 2023, the proposal went through numerous revisions. GitHub logs indicate that developers successfully merged the final proposal on Sept. 29 following technical review and 90 distinct commits.
Security Reviews Cover Different Parts of the Framework
According to the Foundation, independent security audits preceded the mainnet rollout. The implementation repository notes that developers either resolved audit discoveries or acknowledged them as intrinsic design constraints.
Back in July, the Foundation announced that development teams had successfully patched vulnerabilities uncovered in an audit. Meanwhile, the September update stated that the initial programmable token module finished its audit featuring “no critical or high-severity findings.”
Meanwhile, a distinct reference implementation tied to the Swiss Capital Markets and Technology Association framework holds a separate audit standing. Its repository designates a formal independent audit for that specific codebase as scheduled.
The Foundation also disclosed that CMTA has acknowledged CIP-0113 Programmable Asset Tokens as a smart contract equivalent aligning with its CMTAT framework for certification objectives.
The framework managed by CMTA addresses financial instruments portrayed through blockchain tokens—such as debt securities, company shares, and structured products—all issued and administered in line with its technical criteria.
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