XRP Ledger Advances Confidential Token Standard for Banks

TLDR

Table of Contents

The XRP Ledger developer committee has proposed the Confidential MPT standard under XLS-0096 to enable private issued token transfers.
The draft integrates EC-ElGamal encryption and zero-knowledge proofs to hide balances and transaction amounts.
Validators can still verify that OutstandingAmount does not exceed MaxAmount without decrypting confidential balances.
Issuers retain full control, including the ability to freeze accounts and execute clawbacks when required.
The proposal applies only to issued tokens and does not change the functionality of XRP.

The XRP Ledger developer committee has proposed a new privacy standard for issued tokens. The draft, titled XLS-0096, introduces Confidential MPTs to hide balances and transfer amounts. The proposal aims to address banks’ privacy demands while preserving public supply verification.

XRP Ledger Introduces Confidential MPT Standard

XRPL contributor Shawn Xie authored the specification under the title “Confidential Transfers for Multi-Purpose Tokens.” He submitted the draft to the community repository for technical review. The proposal builds on the existing XLS-33 Multi-Purpose Token framework.

However, the new draft integrates EC-ElGamal encryption and zero-knowledge proofs. These tools encrypt individual balances and transaction amounts. At the same time, the design keeps the accounting structure defined under XLS-33.

Xie wrote that “confidential transfers protect user balances while maintaining supply integrity.” He explained that validators can still verify that OutstandingAmount remains less than or equal to MaxAmount. Therefore, the system keeps the total token supply publicly auditable.

The draft confirms that issuers retain full administrative authority. Issuers can freeze accounts and execute clawbacks where required. The framework also treats a designated second issuer account as a non-issuer holder.

Four Core Properties Shape the Privacy Framework

The GitHub documentation outlines four primary properties within the Confidential MPT design. The first property establishes confidentiality through encrypted balances and hidden transfer values. Validators and public observers cannot view individual holdings.

The second property ensures public auditability of the total supply. Validators can enforce that OutstandingAmount does not exceed MaxAmount. They can perform this verification without decrypting confidential balances.

The third property supports selective disclosure through view keys. The design offers a trust-minimized on-chain auditor model. It also provides an issuer-controlled disclosure option when needed.

The fourth property confirms compatibility with existing token structures. Public and confidential balances can exist for the same issued token. The system maintains XLS-33 issuance rules without altering supply caps.

Banks Gain Privacy Without Sacrificing Control

Banks have avoided public blockchains because open ledgers expose transaction histories and balances. The Confidential MPT proposal addresses this concern directly. It enables private transfers while preserving compliance controls.

The standard applies only to issued tokens and does not affect XRP. Issuers continue to control freezing, clawbacks, and reserve management. The system defines OutstandingAmount as the total of all non-issuer balances.

The committee advanced this draft after enabling Permissioned Domains and Permissioned DEX last month. Those tools allow institutions to operate in restricted environments. Together, these updates focus on privacy and compliance features.

At press time, the Confidential MPT proposal remains under discussion on GitHub. The community has not yet advanced it to a validator amendment vote. Developers continue reviewing technical feedback within the public repository.

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