Validators on the XRP Ledger have formally introduced a clawback feature that could make the blockchain ideal for CBDC and stablecoin issuers.
Blockchains have gained prominence over the years for their immutability and irreversible transactions. However, this inherent feature also makes them less ideal for mainstream use cases such as stablecoins and central bank digital currencies.
To this effect, validators on the XRP recently voted on the XLS-39 amendment proposal to enable clawbacks on tokens transferred on the XRP Ledger. The proposal passed two weeks back and has now been activated on the network, developers confirmed.
The XRP Ledger Clawback Amendment is now activated and usable ! pic.twitter.com/Wn3QuTAurL
— Vet 🏴☠️ (@Vet_X0) February 8, 2024
It is worth noting that the newly introduced clawback feature only applies to tokens issued by projects using the XRP Ledger. It cannot be used with XRP, which is the network’s native currency.
Important note for the clawback amendment !!!
This amendment is 𝙤𝒏𝙡𝒚 usable with issued tokens (tokens w/ issuers) on the XRPL, 𝐧𝐨𝐭 XRP.
— Vet 🏴☠️ (@Vet_X0) February 8, 2024
Meanwhile, the functionality is especially important for issued tokens, such as stablecoins and CBDCs, for various reasons. Prime among them is that the issuer may need to claw back tokens transferred by bad actors. Popular stablecoin issuers Tether and Circle have frozen assets multiple times in the past for this reason.
CBDCs may also particularly require this feature, as banks and traditional payment institutions typically serve as middlemen and can roll back transactions if users fail to meet certain regulatory requirements. Even crypto projects may find it helpful for recovering assets stolen by hackers.
Ripple is Also Keen on CBDCs
The latest feature being added to the XRP Ledger is not entirely surprising. Ripple has repeatedly expressed its interest in dominating the market for stablecoins and CBDCs, highlighting how these currencies can boost financial inclusion.
While this feature does not relate to Ripple’s ambition in any way, the broader XRP Ledger could twist toward this direction in coming years. Ripple also remains big on real-world asset tokenization, another multi-trillion dollar industry that could potentially put XRP in the limelight.
