The design keeps the tokens in a shared smart contract, a program on Cardano that controls how they can be moved. Computers checking transactions enforce the chosen rules before accepting a transfer. It uses capabilities already available on Cardano and required no hard fork, a change to the network’s underlying rules.
“The rules have to travel with the asset and be enforced every time it moves,” Frederik Gregaard, chief executive of the Cardano Foundation, said in a statement to CoinDesk.
Issuers can select existing sets of rules or write their own, and update them as regulations change. The foundation named wallets Eternl and GeroWallet, blockchain explorer CardanoScan and developer-tool provider BloxBean among the tools supporting the launch.
Other blockchains already offer versions of this. Ethereum has permissioned token standards such as ERC-3643, Solana added transfer controls through its token extensions, and the XRP Ledger supports tokens whose issuers can restrict holders and claw back balances.
Holding one of these tokens can also mean accepting powers that extend beyond blocking a payment. Depending on its rules, an authorized party could move tokens without the holder’s consent. The technical specification tells lending services to examine those powers before accepting a token as collateral.
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