On October 7, 2026, the Cardano Foundation activated CIP-0113 on mainnet — a programmable token standard that embeds freeze, seizure, KYC, sanctions screening, and transfer restriction logic directly into native Cardano tokens, enforced by the ledger at the consensus layer. The standard required ...
"The rules have to travel with the asset and be enforced every time it moves." — Frederik Gregaard, CEO, Cardano Foundation
On October 7, 2026, the Cardano Foundation activated CIP-0113 on mainnet — a programmable token standard that embeds freeze, seizure, KYC, sanctions screening, and transfer restriction logic directly into native Cardano tokens, enforced by the ledger at the consensus layer. The standard required no hard fork. It was announced at TOKEN2049 in Singapore, the same week the broader tokenized real-world asset market surpassed $46 billion across 36 chains, according to RWA.xyz.
CIP-0113 enters a compliance-token field already occupied by Ethereum's ERC-3643 (over $28 billion in tokenized assets across 200+ deployments), Solana's token extensions program (transfer hooks), and the XRP Ledger's issuer-controlled freeze and clawback functions. The Swiss Capital Markets and Technology Association (CMTA) has recognized CIP-0113 as comparable to its CMTAT framework for tokenized equity issuance — a signal of institutional credibility, though not of adoption.
The standard's launch raises a structural question for Cardano's $55–170 million DeFi ecosystem: compliance-ready infrastructure may attract regulated asset issuers, but the same freeze-and-seize mechanics create new spendability risks for decentralized lending protocols, liquidity pools, and wallets that must now account for issuer-controlled asset restrictions.
CIP-0113 defines a modular standard for issuing tokens on Cardano with compliance rules baked into the asset itself. When a CIP-0113 token is minted, burned, or transferred, the Cardano ledger checks embedded policy rules before the transaction settles. If the rules reject the transfer — say, because the recipient is not on an allowlist or the sender's tokens are frozen — the transaction fails at the consensus layer.
The supported compliance controls include:
seizeWithMemo function adds an on-chain justification.These controls do not apply to ADA, Cardano's native currency, nor to existing Cardano native tokens that do not implement the standard. Only tokens whose issuers voluntarily adopt CIP-0113 carry these restrictions.
The standard was merged into the Cardano Improvement Proposals repository on September 29, 2026, after a development process that began in 2023 and accumulated 90 commits.
Cardano uses the extended UTXO (eUTXO) model, which differs from Ethereum's account-based architecture. In the eUTXO model, assets are held in transaction outputs. A single output can contain ADA plus multiple native tokens. This bundling is efficient for normal operations but creates complications when compliance rules are attached to specific tokens within a shared output.
CIP-0113 uses a modular design: a core standard defines the enforcement interface, while pluggable substandards handle token-specific logic. Issuers can write custom compliance modules or modify existing ones as regulations change. The standard does not require a hard fork because it operates within Cardano's existing native token and Plutus smart contract infrastructure.
Execution costs remain predictable within the eUTXO model, as transaction fees are calculated deterministically before submission. This contrasts with Ethereum, where compliance checks in ERC-3643 consume variable gas depending on the number of identity registry lookups and compliance module calls.
The eUTXO model introduces a complication that Cardano's account-based competitors do not face. When multiple tokens share a single transaction output, restrictions on one token can affect the spendability of unrelated assets in the same output.
Consider a transaction output containing three assets: a regulated stablecoin issued under CIP-0113, a governance token, and ADA. If the stablecoin issuer freezes the regulated asset, the entire output becomes unspendable. The governance token and ADA are not independently frozen — they are collateral damage of the bundling.
CIP-0113 addresses this through an "unfracking mechanism" that allows restricted tokens to be separated into isolated outputs without changing ownership. However, separation requires authorization from both the holder and the restricted token's policy rules. Some issuers may configure their policies to block separation entirely, leaving holders unable to access co-located assets until the freeze is lifted.
Matteo Coppola, CEO of Fluid Tokens and a contributor to the CIP-0113 specification, has described the development process as representing "years of development" to make the framework "production-ready." The unfracking mechanism is the specification's answer to a problem unique to UTXO-based chains.
CIP-0113 enters a compliance-token market where three competing standards are already deployed:
Ethereum — ERC-3643: The incumbent standard, with over $28 billion in tokenized assets across more than 200 deployments in 180+ jurisdictions. Institutional adopters include DTCC, Apex Group, Invesco, Franklin Templeton, and Fasanara Capital. ERC-3643 uses an on-chain identity registry (ONCHAINID) that links wallet addresses to verified claims. Compliance checks occur in EVM smart contract calls. According to a 2026 academic analysis, ERC-3643 covers more than half of the compliance requirements set by WB, IOSCO, FATF, BIS, HKMA, EU, ESMA, MAS, and FINRA frameworks.
Solana — Token Extensions: Solana's token extensions program, launched in 2024, enables transfer hooks — custom logic executed on every token transfer. Issuers can implement allowlists, denylists, and transfer restrictions through these hooks. The approach is more flexible but less standardized than ERC-3643 or CIP-0113, leaving compliance logic implementation to individual issuers rather than defining a common framework.
XRP Ledger — Freeze and Clawback: The XRPL has offered issuer-controlled freezing since its early years, and added clawback functionality in 2024. Issuers can freeze individual trust lines or execute global freezes on all issued tokens. The approach is simpler than ERC-3643 or CIP-0113 but offers less granularity — there is no built-in KYC-gating or sanctions screening at the protocol level.
Cardano — CIP-0113: The newest entrant. Its primary technical differentiator is ledger-level enforcement in a UTXO model, with deterministic execution costs. The CMTA recognition provides regulatory credibility but does not translate to deployment volume. Cardano's DeFi ecosystem holds approximately $55–170 million in TVL (figures vary by source and date in Q3–Q4 2026), compared to Ethereum's tens of billions. The standard's adoption will depend on whether regulated issuers choose to build on Cardano despite this liquidity gap.
The tokenized RWA market provides the demand-side context for CIP-0113.
As of mid-2026, on-chain tokenized assets have reached approximately $46.2 billion across 36 chains, according to RWA.xyz. Tokenized U.S. Treasuries alone account for approximately $15 billion, led by BlackRock's BUIDL fund at over $2.9 billion. The broader market grew roughly 400% from early 2025 to mid-2026. A Forbes analysis of the $60 billion tokenized asset market (measured across 7,000 products) noted that the majority of tokenized assets remain illiquid and infrequently traded.
Ethereum dominates with approximately 65% of tokenized value. BNB Chain, Stellar, and Solana hold smaller shares. Cardano does not currently appear among the top chains for RWA tokenization by value.
The GENIUS Act, which passed the U.S. Senate and is progressing through final regulatory rulemaking at the OCC and other agencies, would establish a federal framework for payment stablecoins. Compliance standards like CIP-0113 and ERC-3643 are positioned to meet the KYC, reserve, and transfer-control requirements that such legislation would impose on stablecoin issuers.
The USDCx stablecoin — a one-for-one USDC-backed token — has recently launched on Cardano through Circle's xReserve program, providing an early use case for compliance-ready token infrastructure on the chain.
The core tension of CIP-0113 — and of compliance-token standards generally — is the conflict between issuer control and DeFi composability.
Decentralized lending protocols depend on the ability to seize and liquidate collateral when borrowers' positions become undercollateralized. If a stablecoin issuer can independently freeze or seize tokens posted as collateral, the lending protocol's liquidation mechanism may fail. A frozen collateral position cannot be sold to repay lenders, creating potential bad debt.
The Cardano Foundation has recommended that lending platforms "review token rules before accepting assets as collateral, as some rule configurations permit authorized parties to move tokens without holder consent." This advisory effectively tells DeFi protocols to price in compliance risk or refuse to list certain CIP-0113 tokens as collateral.
Wallet developers face a parallel challenge. Wallets must now track which token policies share outputs, monitor separation permissions, and assess whether freeze rules could interfere with transactions. The alternative — segregating CIP-0113 tokens into isolated outputs by default — increases transaction complexity and costs.
The tension is not unique to Cardano. Ethereum's ERC-3643 tokens already present composability issues for Ethereum DeFi, and Solana's token extensions can similarly interfere with protocol assumptions about asset transferability. But the UTXO spillover effect — where restricting one asset can block access to co-located assets — is a Cardano-specific complication that adds a layer of friction absent from account-based chains.
The following ecosystem participants support CIP-0113 at launch:
| Category | Participants | |----------|-------------| | Wallets | Eternl, GeroWallet | | Block Explorer | CardanoScan | | Developer Tools | BloxBean | | Standard Recognition | CMTA (Swiss Capital Markets and Technology Association) |
No major institutional issuers have publicly announced plans to deploy tokens under CIP-0113 as of October 7, 2026. The standard's status in the CIP repository is listed as "Proposed" — a designation indicating that further milestones including end-to-end testing and widespread wallet adoption are required before it reaches "Active" status.
CIP-0113 gives Cardano the technical infrastructure to host regulated financial assets. The standard is well-designed: modular, ledger-enforced, compatible with evolving regulatory requirements, and recognized by a credible Swiss industry body. The implementation required no hard fork and preserves Cardano's native token architecture.
The question is not whether the technology works. It is whether it attracts issuers. Ethereum's ERC-3643 has a three-year head start, $28 billion in deployed tokenized assets, and institutional adoption from firms like Franklin Templeton and DTCC. Cardano's DeFi ecosystem is smaller by two orders of magnitude. Compliance infrastructure is necessary but not sufficient — issuers also need liquidity, custody integrations, and secondary market depth.
CIP-0113 positions Cardano to compete for a share of the $46 billion tokenized asset market. Whether that position converts to actual deployments depends on factors the standard itself cannot control: issuer preferences, regulatory developments, and the depth of Cardano's financial infrastructure relative to its competitors.