Cardano’s CIP-113: Brale, Encryptus and Deploi Discuss Stablecoins and Private Credit

Representatives from Brale, Encryptus and Deploi discussed the potential uses of Cardano’s CIP-113 standard during a Cardano Foundation roundtable on October 29. The conversation covered stablecoin transfers, private credit, security audits and the work needed to support programmable tokens across the ecosystem.

CIP-113 became available on Cardano mainnet on October 7. The framework allows issuers to apply rules to native tokens through smart contracts, including restrictions on who can hold or transfer an asset.

How Programmable Tokens Work on Cardano

Giovanni Gargiulo, a senior blockchain architect at the Cardano Foundation, explained that CIP-113 combines native assets with smart contracts that check issuer-defined rules. Those rules are organized into modules, allowing issuers to choose controls suited to their products.

A module could restrict transfers to addresses associated with users who have completed identity verification. Other functions can include lists of prohibited addresses, freezing or seizing tokens, and additional transfer conditions.

Gargiulo explained that checks can apply when tokens are issued, burned or transferred. The framework does not require a hard fork, and existing Cardano assets continue to operate under their current rules.

Estelle Roiena, the Foundation’s institutional finance and asset integrations lead, noted that requirements differ according to the asset, jurisdiction and participants. She also identified infrastructure, liquidity and partner networks as parts of developing a market for tokenized assets.

Stablecoin Transfers and Private Credit

Tyler Wales, head of business development at Encryptus and Anzens, described how USDA, a U.S. dollar-backed stablecoin issued on Cardano, is used to move value between countries.

In his example, dollars are used to mint USDA in the United States. The tokens are then sent to a wallet in India and redeemed for Indian rupees. Wales explained that identity checks and other requirements have been handled outside the blockchain and discussed how onchain controls could support interactions with other projects.

Brale Head of Engineering Edward Fleming addressed the challenges of issuing stablecoins across markets with different requirements. He explained that the company operates in most U.S. states and must account for rules that vary between jurisdictions.

Fleming described an approach in which policies are maintained offchain while controls are enforced onchain. During regulatory examinations, the company could point to the policy and the corresponding onchain implementation, he explained.

Oskars Jepsis, founder and CEO of Deploi, outlined the company’s approach to private credit. Deploi connects lenders and investors and verifies loan and cash-flow data, helping investors identify opportunities that match their criteria.

Jepsis described a token model backed by real loans in which only approved investors can hold the asset. He also stated that nobody, including Deploi, can seize the token.

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Integration and Security Work

Fleming identified two challenges in implementing CIP-113: coordinating support across wallets, marketplaces and other infrastructure providers, and completing the security reviews associated with the implementation. An audit during Brale’s development work added to the initial workload, he noted.

Gargiulo explained that the standard’s implementation had undergone two rounds of audits. Individual modules also need to be reviewed, he added, because different financial products can use different sets of rules. Jepsis described the testing required to ensure that Deploi’s smart contract rules meet its business requirements.

The panel also discussed how programmable tokens could work with existing Cardano infrastructure. Gargiulo pointed to work involving Eternl, GeroWallet, CardanoScan and Cexplorer, and explained that decentralized exchanges could adapt parts of their existing systems to handle the tokens.

For automated market maker exchanges, Gargiulo noted that integrations would need to account for the programmable token checks when building transactions.