Issuer controls for tokens

Hello, Everyone.

I’m working on a project that I’d love to use Cardano for but I’m not sure if the features required are available for native (obviously not ADA) tokens on Cardano. Can someone let me know if the following is available natively?

Asset Issuer needs to be able to “greenlist” access to the token
Asset Holder needs to similarly “greenlist” the issuer, and by proxy accepts whatever controls imposed by Issuer
Asset issuer needs to be able to clawback or freeze assets (the thing holders would need to agree to)

These are important features for regulators in my jurisdiction.

If not natively available what would my options be? With the goal of users being able to use whatever wallet/key management system they use today (like metaco, or fireblocks, or ledger, or daedalus)

Thank you,

@kyleo there’s been a lot of discussion in the last few weeks about managed token behaviour through some proposed standards. In summary, having this behaviour on Cardano has been characterised in these standards discussions as technically problematic and challenges some commercial & ethical principles:

… including this proposal which was literally written into the Rejected state (by one of Cardano’s top architects) based on all the ways the idea was determined to be unworkable and/or undesirable:

Personally I’d maintain that what’s “important for regulators” is catastrophic for everybody else. So the best I can offer is to point you & others to these ongoing discussions, so you can decide whether the system you’ve imagined can somehow be layered upon Cardano… I do believe the commercial motive to do this (which you’ve already seen) will cause many developers to attempt similar architectures, and you’d be likely to find ideas relevant to your own if you follow these proposals over time. :face_with_monocle:

Many thanks for the detailed/curated response!

If the features are optional what’s the ethical issue here?

If the token holders agree to the conditions the issuer has defined what’s the ethical issuer?

Personally what’s more catastrophic is not providing features that many regulated businesses need, forcing those business to use other platforms.

Someone can develop a token standard using Plutus, implementing these features like ERC-20/721 did, but: 1) that’s bunch more work for the developer/business, 2) requires wallets get updated to support a new dapp 3) the plutus code will need to be audited for every token created 4) regulators are very weary of smart contracts

Why not facilitate something natively that can already be done non-natively because people have opinions on its morality?

I guess if your assassin is making you dig your own grave, you probably should dig slowly.

Good luck finding people to help you dig.

You’re welcome & as I recall, if you read every comment in those 3 discussion threads as well as the reservations that are listed in the proposals themselves, you also will find answers or at least points for consideration about your questions regarding “ethics” as well as the technical difficulties. That’s the best contribution I can make to your project plan so I will leave it at that.

The primary ethical consideration of course is not creating opportunities for users to be robbed by each other, or by the protocol developers (while they’re waiting to be robbed by the “regulators”).

Who is the assassin in your analogy?

Cardano will not be successful without transaction fees. If business can’t (easily) use the platform they will migrate (those fees) elsewhere. Seems like its more like suicide… or cutting ones nose off to spite their face.

Definitely need to read through those posts/threads thoroughly and opine.

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Those that seek to override our natural human rights.

I won’t help them build their tools.

I am taking about providing the facility to enable an optional feature on a token that users choose to interact with.

If you do not like/agree with the options business/asset issuer includes in their token then you have every right not to interact with it. In the same way as you can chose to shop at store ABC instead of store XYZ.

Why prevent businesses/asset issuers from trying to find customers/users who do like/agree/require these, once again, optional features?

I understand that. And I would prefer that your “optional feature” of clawback was not possible. Then it is a case of “can’t be evil” rather than relying on “won’t be evil”.

Except if it gets made the standard and everyone trusts that such “optional feature” will only be used to correct something illegal or morally wrong. The problem being that some human gets to decide what is illegal or morally wrong.

I suggest you ask the Canadian truckers, and those that donated to their political protest, how the “optional feature” to freeze their fiat bank accounts, played out for them recently.

Even with the discussed spending scripts, clawback won’t be possible, “just” freezing. You can’t spend a UTxO without the signature of the owner and that won’t change.

Why should everyone trust that? That feature would be used by the issuer of a native asset. Trusting every issuer that they only use it for “good” causes would be foolish. Buyers should scrutinise every use of it and this scrutiny is an incentive for token issuers to only mint that into their asset if it is absolutely necessary for their use case or in their jurisdiction.

It will never be used for ADA themselves or on an asset, where the issuer did not decide to use it themselves. But it could be valuable to allow issuing real shares of companies as native assets and fulfil the legal requirements for that – instead of the basically lawless “utility” tokens that every project issues today.

These despicable “protests” are actually a point, why it is good if the government has the power to freeze assets. …

In those CIP discussions I see more technical issues than ethical issues.

Allowing spending scripts will be major change to the core protocols that has to be implemented by the nodes as well as every wallet app and other client.

If it ever comes, don’t expect it to come soon, rather in years.

Sure, the number of little technical problems is greater than the number of more significant & broadly defined ethical problems… the latter including the ethical constraint of “Don’t create an exploitable protocol that loses all users’ funds due to vulnerabilities that have been well known via Ethereum for years” :stuck_out_tongue_closed_eyes:

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That (the second part of the comment) is actually a quite elegant proposal totally possible with today’s technology. I like it.

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Greetings @kyleo,
I think I am starting to understand what is being asked.
I think you are interested in minting tokens of which it is understood and recorded by the recipient that the tokens can be clawed back.

The mechanism to do this was not specified but the CIPs linked by @COSDpool indicate that it could be done with some changes to the protocol.

Do I understand so far?
Seems to me like a Central Bank Digital Currency (CDBC).

I have the following questions please:
So I can understand better, please explain, how is this different from a CDBC?

If the intent is central control of a digital asset then why use distributed ledger technology?

Wouldn’t you be better using a protocol which is centrally controlled?

Solana comes to mind but there are many others.
While Hydra will make possible millions of transactions per second, a centrally controlled blockchain like Solana can give you pretty good transaction speed now along with the central control desired.

What are your thoughts about using Solana for your project?

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Countries like Canada and Australia, do recognise a right to protest. Such countries also have a clear separation of powers between the parliament, executive and judiciary, and this is enshrined in their constitutions. The explicit reason for this is so that you can’t end up with one person as dictator becoming judge, jury and executioner.

Whether you agree with the Canadian truckers or not is beside the point. It is up to the courts to decide if what the truckers (and their supporters) were doing was illegal. They should have been afforded natural justice. Instead new laws / regulations were passed and banks were instructed to freeze bank accounts.

Considering how society has changed, with all money being essentially digital now, this amounted to removal of their ability to feed themselves, pay for clothing, pay for electricity for heating, and pay for fuel to travel.

I believe that in our now digital world, removal of the right to access your own money, is removal of a natural human right.


Hi @kyleo,

I personally agree with you that these features should be provided and that it’s simply a matter of whether someone wants to use them or not.

With that said, I think that the requirements of your project are similar to what Soulbound Tokens are trying to bring to the table (correct me if I am wrong). This is a topic I have been researching for a few months now and I believe should be available in Cardano (and I am also willing to develop).

I understand the feeling of trying to use Cardano for every project and idea you have, but the reality is, in my humble opinion, that blockchains are simply tools; and you don’t necessarily use always the same tool for everything.

So, if you are looking for a blockchain that has those features available natively and you don’t have the time to wait for Cardano, I suggest you look into Algorand: Algorand Standard Assets (ASAs) - Algorand Developer Portal. The parameters you should take a look at are Freeze Address and Clawback Address.

Let me know if you need any help or have any doubt. I have been working with these kind of assets there.

Hope this helps!

Thanks for the response and the link to Soulbound!

Yea. I’ve been looking at algorand quite a bit.

Thus far the most appealing tokenization platform is actually Stellar (imho). Which I’ve used for this purpose extensively, but looking for more popular platforms, which is what is behind the desire for Cardano.

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