Developers working on the @Ripple-backed XRP Ledger have proposed four code changes to close loopholes that let restricted tokens reach accounts without issuer approval. The changes were prop
Developers working on the @Ripple-backed XRP Ledger have proposed four code changes to close loopholes that let restricted tokens reach accounts without issuer approval. The changes were proposed this week for the ledger's core software and are bundled into a single upgrade, fixCleanup3_5_0, for the $XRP network.
Issuers of regulated assets, such as stablecoins and tokenized funds, can require approval before an account holds their tokens, CoinDesk reported, often so they can run identity checks first. That approval sits on the trust line, the connection an XRP Ledger account sets up to hold a token issued by someone else. Developers have found a few ways around the rule.
The proposals would stop accounts without issuer approval from receiving or holding tokens that require it. One change would require an account to be approved for both tokens in a trading pool before it can buy in. According to TokenPost, that check would apply to liquidity-provider (LP) tokens obtained through payments, offers, NFT offers and automated market maker (AMM) bids. An LP token represents a claim on the assets held in a pool, so the proposal extends issuer authorization to that claim.
Another change would limit what an unapproved holder can do. Under the proposals, Crypto Briefing reported, the main thing a holder could do with unapproved restricted tokens is send them back to the issuer.
The XRP Ledger Foundation has said no users were affected, and CoinDesk reported that it knows of no outsider exploiting the remaining exceptions. TokenPost quoted Hussein "Vet" Zangana, the Foundation's director of community and product, as saying the discussion is about what the protocol should guarantee, not a report of affected users.
The fixes remain under review. CoinDesk reported that none of the four changes has been merged into the network's main software or activated on mainnet. TokenPost reported on Oct. 30 that two of the four proposals remain open after their authors closed the others, and that the remaining code would need to enter a software release before validators could vote.
Like every XRP Ledger amendment, fixCleanup3_5_0 would need backing from more than 80% of trusted validators for two consecutive weeks before it switches on. The XRP Ledger's own release notes describe the amendment process as enabling protocol changes following two weeks of support above 80% from trusted validators. If support falls below the threshold, the two-week period restarts.
The proposals come as financial institutions expand their use of the ledger for digital assets. For regulated issuers, the ability to control which accounts can hold specific assets is a core requirement.
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