The Cardano Foundation has activated the CIP-0113 token standard on its mainnet following an independent security audit. The new standard grants token issuers sweeping authority: rejecting transfers to parties that have not passed identity verification, freezing assets in sanctioned wallets, and seizing tokens under regulatory or court orders.
This makes it possible for tokens utilizing the CIP-0113 standard to potentially be transferred without the consent of the original holder, depending entirely on the rules set by the issuer.
Compliance Embedded in Assets
CIP-0113 was designed to facilitate regulated instruments such as stablecoins, tokenized funds, and digital bonds. Issuers of these financial instruments are required to comply with Know Your Customer (KYC) regulations and international sanctions screening.
These rules travel alongside the asset. The Cardano network verifies every compliance requirement before approving a transfer, including transactions between wallets across different services.
The rollout of CIP-0113 operates directly by leveraging existing capabilities within the Cardano network, meaning the ecosystem did not require a hard fork. “Rules must travel with the asset and be enforced every time it changes hands,” said Cardano Foundation CEO Frederik Gregaard.
Supporting infrastructure has already responded to the upgrade. The Eternl and GeroWallet wallets, the CardanoScan explorer service, and BloxBean now support the CIP-0113 standard.
Catching Up with Institutional Rivals
Cardano’s move to release this standard gains strong backing from Switzerland’s Capital Markets and Technology Association (CMTA) - an industry body whose standards serve as a key benchmark for issuing tokenized equity.
The arrival of CIP-0113 also brings Cardano in line with other major networks that have already introduced similar features for institutional clients. Ethereum relies on the ERC-3643 standard, Solana offers token extensions, and XRP Ledger features clawback capabilities. Cardano is now catching up to close the gap.
This infrastructure update comes amid downward price pressure across exchanges. ADA slipped 4.5% over the past 24 hours, tracking a broader downturn weighing on the crypto market. While CIP-0113 paves the way for institutional capital inflows, it comes at the expense of shifting pure decentralization principles at the asset level.
Reported by CoinDesk.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
