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Glossary entry

Stablecoin Freeze Function

DeFi

The issuer-controlled contract function that can block or seize stablecoin balances, why it exists and what it means for token holders.

Definition

Many fiat-backed stablecoins include a freeze or blacklist function in their smart contract that lets the issuer block specific addresses from sending tokens, and in some designs burn or reissue balances. Issuers use it to comply with court orders, sanctions lists, and law-enforcement requests, and sometimes to help recover funds after a theft. The capability means these tokens are not censorship-resistant in the way a base-layer coin is: holding them involves trusting an administrator key that can immobilise a balance without the holder's consent. Contracts are public, so users can check whether such a function exists and who controls it. Some decentralised designs omit it, trading recoverability for stronger neutrality.

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