Cardano merged CIP-113, a standard that lets issuers attach freezes and compliance rules to programmable tokens such as stablecoins and securities. Because the network bundles tokens together in a single transaction output, a restriction on one asset can temporarily block unrelated tokens and ADA held in the same output. Wallets and DeFi lenders may need to change how they group assets to avoid inheriting that risk.
CIP-113 merges into Cardano's codebase
CIP-113 merged into Cardano's main improvement-proposal repository on Sept. 29, adding issuer-controlled transfer rules to native assets while keeping the network's extended unspent transaction output, or eUTXO, model intact. The Cardano Foundation has positioned programmable tokens as infrastructure for regulated stablecoins, securities and real-world assets that may need transfer restrictions, freezes and other compliance controls.
Still, the milestone stops short of full activation. CIP-113's official page still lists the proposal as "Proposed," with its path to Active requiring issuance on Preview and mainnet, end-to-end testing, and support from a widely adopted wallet.
Matteo Coppola, chief executive officer of Fluid Tokens and a contributor to CIP-113, said the merge followed years of development. According to CryptoSlate: "This means the official standard for programmable tokens on Cardano, including securities, is out", Coppola said.
A freeze on one token can block others nearby
Under the eUTXO model, a transaction output can hold several tokens alongside ADA, and spending that output consumes it as a unit. So a freeze or denylist rule on one restricted token can prevent the holder from moving an unrelated token sharing the same output, even though that second asset was never independently frozen. ADA faces the same exposure, since outputs carrying tokens also carry ADA.
CIP-113 offers a fix through a mechanism called "unfracking," which lets one token policy be split from the rest of an output without changing ownership. But the holder does not automatically control that separation — an unfracking transaction needs the holder's authorization and must satisfy the restricted token's registered separation rules, which can require an extra signature, impose script conditions, or block the route entirely.
Wallets and lenders face new collateral risk
For wallets, a displayed balance may no longer show what can be spent immediately, since some assets could be temporarily locked alongside a restricted token. For lending protocols, the issue becomes a collateral-management risk: a platform accepting a programmable token as collateral would need to weigh whether its issuer can freeze transfers and whether that could interfere with a liquidation during a market downturn.
The CIP-113 reference implementation describes single-policy outputs, where programmable assets are kept separate, as the preferred construction, though it does not require developers to use them. Wallet developers could segregate programmable policies by default, while lending protocols may impose lower collateral values or reject tokens whose freeze and separation rules create uncertainty. The first production integrations of CIP-113 will show whether projects build around that risk or leave it for protocols to price in.
Source: CryptoSlate
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