# Cardano gives token issuers the power to freeze and seize holdings as Conduit sues Tether over a frozen USDT balance

The CIP-0113 standard, a Cardano Improvement Proposal, writes identity, sanctions and transfer rules into the token itself. Meanwhile, the payments firm Conduit is suing Tether over $2.76 million in USDT that Tether froze in connection with a Brazilian investigation.

- Published: 2026-10-07T05:31:53.993Z
- Canonical: https://polylog.news/crypto/2026-10-07/cardano-gives-token-issuers-the-power-to-freeze-and-seize-ho
- Publisher: Polylog (Crypto desk)
- Section: crypto
- Sources: [CoinDesk](https://www.coindesk.com/tech/2026/10/07/cardano-gives-token-issuers-power-to-freeze-seize-and-restrict-assets), [crypto.news](https://crypto.news/conduit-sues-tether-over-2-76m-frozen-usdt/), [Crypto Briefing](https://cryptobriefing.com/cardano-cip-0113-token-compliance-standard/), [TFTC](https://www.tftc.io/cardano-cip-0113-freeze-seize-token-standard-mainnet)

The Cardano Foundation has launched CIP-0113, a standard that [lets issuers of regulated tokens restrict recipients and freeze, seize or move holdings](https://www.coindesk.com/tech/2026/10/07/cardano-gives-token-issuers-power-to-freeze-seize-and-restrict-assets) under rules they define. The standard is aimed at stablecoins, funds and bonds whose issuers need identity checks and sanctions controls built into the asset itself. A fund restricted to verified investors could reject a transfer to an unverified wallet. A stablecoin issuer could block tokens from reaching a sanctioned address.

The standard is [live on mainnet after independent security audits](https://www.tftc.io/cardano-cip-0113-freeze-seize-token-standard-mainnet) and needed no hard fork. Issuers can [update their rules as regulations change](https://cryptobriefing.com/cardano-cip-0113-token-compliance-standard/). Holders of these tokens accept that an authorized party can move their balance without their consent. Other chains already offer the same function. Ethereum has ERC-3643, a token standard for permissioned transfers. Solana has transfer controls in its token extensions. The XRP Ledger supports issuer clawback (the issuer's ability to reclaim tokens).

A court case shows how these powers work in practice. Conduit [sued Tether over $2.76 million in USDT](https://crypto.news/conduit-sues-tether-over-2-76m-frozen-usdt/) that the issuer froze in connection with an investigation in Brazil. Conduit is asking for access to the funds and damages. It is also claiming the profits Tether earned on the reserves backing the frozen tokens. Tether's public response to the specific claims does not appear in the reporting.

Tether's USDT has $184.29 billion in circulation, according to DeFiLlama, out of a total stablecoin supply of $314.99 billion.

## What this means

Issuer-level freeze and seizure is becoming standard infrastructure on every major chain, not just a feature of Tether and Circle contracts. That gives any government that can compel an issuer an enforcement tool on public ledgers. The exposed parties are payment firms and treasuries that hold issuer-controlled tokens as working capital, and people in jurisdictions whose investigations can trigger a freeze abroad. Conduit's claim to reserve profits is new. If a court accepts it, issuers would carry a financial cost for holding frozen balances, which they currently do not. The precedent is the 2022 freezing of USDC in Tornado Cash-linked addresses, after which issuers expanded blacklisting rather than limiting it. The likelier outcome over the next several months is that regulated tokenized funds and bonds choose chains that offer standards like CIP-0113, while users who need neutrality move toward non-custodial assets and privacy tooling. This read is wrong if courts start forcing issuers to unfreeze funds or compensate holders, because that would make blanket freezing costly.

## What to watch

- The first regulated stablecoin or tokenized fund to issue on Cardano under CIP-0113. It would show whether the standard attracts issuers who would otherwise use Ethereum or Solana.
- How the court treats Conduit's claim to reserve income on frozen balances. A ruling for Conduit would change the economics of freezing for every issuer.
- Further freezes linked to Brazilian investigations, which would show how far one country's investigators can reach through a dollar stablecoin issuer.