Invest2 publishersIndependently confirmed2 min readPublished
Cardano's CIP-0113 catches up to rival chains on issuer freeze and seize powers
Cardano Foundation put CIP-0113 live on mainnet Oct. 7, letting stablecoin, fund and bond issuers freeze, seize or block token transfers without a hard fork. Depending on an issuer's rules, holders accept that an authorized party can move their tokens without consent.
The Investor · Invest desk
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What happened
- The Cardano ledger itself checks identity, anti-money-laundering and sanctions rules whenever a token is minted, burned or transferred, instead of an issuer's off-chain server.
- Ethereum's ERC-3643, Solana's token extensions and XRP Ledger tokens with clawback already give issuers similar powers over holders.
- Switzerland's Capital Markets and Technology Association recognized CIP-0113 tokens as comparable to CMTAT, its framework for certifying equity securities on-chain.
- The proposal was merged into the official Cardano Improvement Proposals repository on Sept. 29 and announced live at TOKEN2049 eight days later.
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Why it matters
- exposure Lending services take on the issuer's transfer powers with any CIP-0113 token they accept as collateral, and the specification makes examining those powers their job.
- constraint Wallets and DeFi protocols that bundle several tokens and ADA in one eUTXO output have to keep restricted assets apart, or a freeze on one token can hold up the rest.
- cost Because issuers can rewrite a token's rules as regulations change, a holder buys terms the issuer can alter after the purchase.
"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 [15]. For a holder, the question is whose rules. Issuers can take an existing rule set or write their own [7], and CryptoBriefing concluded that holders of these tokens are trusting the issuer as much as the code [9].
The foundation limited the reach of the controls. Only tokens whose issuers opt in carry them, and ADA itself is not being made freezable [16]. The standard runs on capabilities Cardano already had [3], with a core standard and pluggable substandards for token-specific logic [10]. So the foundation is courting regulated issuers without touching the base asset or the network's rules [16][3]. Getting there took about three years, from community development and audits that began in 2023 to a mainnet launch in 2026 [12][2][19].
Rival chains already offer versions of these controls [11]. That means CIP-0113 removes a reason to keep a regulated stablecoin, fund or bond off Cardano without giving an issuer a reason to choose it. Issuers already live on Ethereum, Solana or the XRP Ledger may simply stay where their buyers and lenders are. Alternatively, the CMTA finding [5] brings in Swiss tokenized-share issuers, who get a compliance case they do not have to build themselves. Or the shared-output problem slows wallet and lending integration [17], and compliant tokens get minted but see little use in trading or lending.
I think parity is the likeliest outcome, with Swiss tokenized shares the most plausible exception, because the CMTA finding is the one part of the launch aimed at a defined group of issuers. The counter-case is that the finding permits Swiss issuance on Cardano without requiring it. Every partner named at launch (the Eternl and GeroWallet wallets, the CardanoScan explorer and developer-tool provider BloxBean) builds infrastructure [8]. Neither CoinDesk nor CryptoBriefing names an issuer that has committed an asset to the standard. I would be wrong if the first issuers are institutions that could have used ERC-3643 or the XRP Ledger and picked Cardano for CIP-0113 itself.
ADA moved with the market on launch day, falling 4.5% in 24 hours alongside a broader drop, according to CoinDesk [14].
What to watch
- A Cardano lending service's first decision on accepting a CIP-0113 token as collateral, after the review of issuer powers the specification asks for.
- Any wallet or DeFi case where a restriction on one asset holds up other tokens or ADA sitting in the same eUTXO output.
- The first rule change an issuer pushes to a live CIP-0113 token will show how far holder terms move after purchase.