The Cardano Foundation has implemented a new compliance-focused protocol, CIP-0113, on the Cardano blockchain, granting issuers of regulated tokens administrative powers to freeze, seize, or restrict token transfers when legally necessary. The new standard became operational on October 7, 2026.
Expanded capabilities for regulated asset issuers
CIP-0113 allows issuers of assets such as stablecoins, tokenized funds, and digital securities on the Cardano network to halt transactions, reclaim tokens, and restrict who can receive or hold these assets. This development supports financial instruments that must meet regulatory requirements, including sanctions enforcement and investor eligibility verification.
Traditional cryptocurrency systems, such as those on earlier blockchain networks, typically enable free peer-to-peer transfers with few restrictions. This lack of built-in controls has posed challenges for financial institutions required to comply with legal and regulatory frameworks.
“The rules have to travel with the asset and be enforced every time it moves,” Cardano Foundation chief executive Frederik Gregaard stated following the activation of the new protocol.
CIP-0113 directly integrates compliance logic into the token itself. When a transaction on Cardano is initiated, the network’s consensus mechanism checks the specific policies embedded within each token. If a transfer does not meet the defined criteria—for example, if a recipient has not completed identity checks or is on a sanctions list—the network will block the transaction before it can be finalized.
Applications for such technology include stablecoins tied to fiat currencies, investment vehicles targeting accredited investors, and securities that must adhere to jurisdictional restrictions.
On-chain enforcement without centralized oversight
Unlike some systems that depend on external servers or centrally managed dashboards, Cardano’s CIP-0113 processes every relevant transfer, mint, or burn event directly on-chain. This distributed approach ensures that compliance measures are maintained, regardless of which wallet service or exchange platform is used.
The Cardano Foundation noted that the upgrade did not require a hard fork. Instead, the new functionality leverages components already embedded in the blockchain’s core protocol.
Early support for the standard has come from several ecosystem platforms, including the digital wallets Eternl and GeroWallet, the blockchain explorer CardanoScan, and the developer toolkit BloxBean.
Switzerland’s Capital Markets and Technology Association, an independent industry group that develops digital asset guidelines, formally recognized CIP-0113 as compatible with Swiss standards for on-chain equity instruments.
CIP-0113 follows similar compliance-focused standards available on other blockchains. Ethereum offers ERC-3643 for permissioned tokens, Solana includes transfer restrictions via its token extensions, and the XRP Ledger supports issuer-enforced freezing and asset recovery.
Mini dictionary: Capital Markets and Technology Association (CMTA), a Swiss organization promoting industry standards and compliance for digital assets and tokenized financial instruments.
| Blockchain | Compliance Feature | Standard/Protocol |
|---|---|---|
| Cardano | On-chain freezing, seizure, compliance validation | CIP-0113 |
| Ethereum | Permissioned and restricted token transfers | ERC-3643 |
| Solana | Transfer hooks, compliance guards | Token extensions |
| XRP Ledger | Issuer-controlled freeze and recovery | Native features |
Modular design and technical considerations
CIP-0113 features a modular design made up of a foundational standard and policy modules that can be adaptively updated by issuers according to regulatory requirements. This flexibility gives asset issuers the ability to modify or add new compliance policies without creating new tokens.
Cardano’s ledger uses a UTXO (Unspent Transaction Output) model, which allows many token types to be bundled within a single transaction output. When controls are applied to one token within such outputs, other tokens in the same basket could be unintentionally impacted. The Cardano Foundation describes a process called “unfracking” to mitigate this risk and ensure isolated enforcement of each token’s rules.
Technical guidance from the Foundation recommends that lending protocols and wallet providers closely examine a token’s embedded policies before listing it or accepting it as collateral. Some configurations allow authorized parties to move tokens without the account holder’s consent, depending on the issuer’s predefined compliance logic.
The Cardano-native coin ADA is not affected by CIP-0113 and remains fully transferable and permissionless. Issuers must voluntarily opt in to use the new protocol controls for their own tokens.
ADA’s price declined by 4.5% over the past 24 hours amid broader market downturns across the cryptocurrency sector.
