Cardano The foundation has introduced a token standard that allows issuers of regulated assets such as stablecoins, funds, and bonds to decide who can receive their assets, and to freeze or confiscate holdings when required by the rules.
A Swiss non-profit organization that supports the development of Cardano stated on Wednesday that a proposal for improvement known as CIP-0113 of Cardano has been officially launched online and has passed independent security audits.
Most crypto tokens can be sent to any wallet as long as the holder wishes, but banks and fund managers that have regulated assets on the blockchain cannot do so.
They must ensure that tokens do not flow to buyers who have not completed identity verification, nor to sanctioned addresses, and they must be able to freeze assets when ordered by regulatory authorities or courts.
The new standard writes these controls directly into the tokens themselves, and the network will check the rules before each transaction occurs.
The CEO of the foundation, Cardano, stated in a declaration sent to CoinDesk: 'Rules must flow with the assets and be enforced with each transfer.'
The issuer can choose from existing rule sets or write their own rules, and update them as regulatory requirements change. The foundation mentioned that the tools supported for this launch include wallets Eternl and GeroWallet, blockchain browser CardanoScan, as well as development tool provider BloxBean.
Other blockchains have already provided similar functionality. Ethereum has licensing token standards such as ERC-3643, Solana adds transfer controls through its token extensions, and XRP Ledger also supports tokens where the issuer can restrict holders and reclaim balances.
Holding such tokens may also imply accepting permissions beyond those that merely prevent payments. According to their rules, the issuer may transfer the tokens without the holder's consent. This technical specification also requires lending services to review these permissions before accepting tokens as collateral.
The foundation also announced that it has been recognized under the certification frameworks of Swiss industry organizations Capital Markets, and, and Technology Association. The standards of these organizations are used for issuing tokenized stocks.
The ADA of Cardano has fallen by 4.5% in the past 24 hours, and the broader market has also seen declines.
