Cardano launches CIP-0113 token standard with compliance controls

The Cardano Foundation has launched the CIP-0113 token standard on the Cardano mainnet, enabling issuers of stablecoins and securities to freeze, seize, and restrict assets directly on-ledger. While this compliance framework appeals to institutional issuers and has earned recognition from the Swiss Capital Markets and Technology Association, it introduces technical risks. Under Cardano's eUTXO model, a freeze on one token can temporarily lock unrelated assets sharing the same transaction output, forcing wallets and DeFi protocols to manage complex "unfracking" mechanisms and collateral risks.

Launch and development of CIP-0113

• ▪The Cardano Foundation named wallets Eternl and GeroWallet, blockchain explorer CardanoScan, and developer-tool provider BloxBean as tools supporting the launch of CIP-0113 on Cardano's mainnet
• ▪The CIP-0113 standard was merged into the official Cardano Improvement Proposals repository on September 29, 2026, following community development and audits that began in 2023
• ▪The Cardano Foundation announced the launch of the CIP-0113 token standard on the Cardano mainnet on October 7, 2026, during the TOKEN2049 conference

Compliance controls and ledger validation

• ▪The CIP-0113 standard allows issuers of regulated assets on Cardano to restrict recipients, freeze, seize, or transfer holdings under specified rules, and enforce compliance checks on every transfer
• ▪The compliance rules of CIP-0113 are validated directly by the Cardano ledger whenever a token is minted, burned, or transferred, requiring no hard fork of the network

Impact on shared transaction outputs

• ▪A token issuer's control over a restricted asset does not grant ownership of unrelated assets that happen to share the same transaction output
• ▪Under Cardano's eUTXO model, a restriction or freeze attached to one programmable asset can temporarily block unrelated tokens and ADA that share the same transaction output

The unfracking mechanism

• ▪CIP-0113 introduces an "unfracking" mechanism that allows a restricted token to be separated into its own output while leaving unrelated assets in another output controlled by the same holder
• ▪An unfracking transaction under Cardano's CIP-0113 standard requires the holder's authorization and must satisfy the affected token's registered separation rules, which can block the restructuring route entirely

Risks for DeFi and wallets

• ▪Lending protocols accepting tokens issued under Cardano's CIP-0113 standard as collateral must assess whether issuer controls, such as freezes, could interfere with liquidations or withdrawals during market downturns
• ▪Wallets and DeFi protocols face design risks under CIP-0113, as asset ownership alone may no longer guarantee immediate spendability if assets are bundled in shared outputs

Debatable claims

• ▪DeFi protocols should reject CIP-0113 tokens as collateral
• ▪CIP-0113 poses an unacceptable risk to unrelated assets sharing transaction outputs
• ▪CIP-0113's compliance controls compromise Cardano's decentralized principles