XRP Ledger Wants to Plug Loopholes in Restricted Token Rules
What’s going on?
The XRP Ledger team is cooking up a set of updates to tighten how “restricted tokens” work—specifically, the stuff that requires the issuer’s okay before you can receive and hold it. Because apparently, the network would like fewer loopholes and more “nope, not without permission.”
These changes are bundled under an amendment called fixCleanup3_5_0. The goal is to make existing approval rules behave consistently, no matter which path tokens take while moving around the network.
Why issuers get to say “approved or not”
If you’re dealing with assets like regulated stablecoins or tokenized fund products, the issuer can require approval before an account can hold their tokens. Think of it like a bouncer at a club: you’re not getting in just because you showed up.
That approval gets recorded on what the XRP Ledger calls a trust line—basically the connection an account sets up to hold another party’s issued token. So the issuer can run eligibility checks (like identity requirements) before granting access.
Fix #1: Closing the “LP token” sneaky route
One of the proposed fixes targets a gap involving automated market maker pools and the liquidity provider tokens (a.k.a. LP tokens) you get for participating.
Here’s the problem: depositing into a pool already triggers the relevant authorization checks. But if someone received LP tokens through other routes, an account that wasn’t approved could still end up with exposure to restricted assets.
So this proposal extends authorization checks across more ways people can acquire LP tokens—covering payments, trading offers, and even NFT offers that involve LP tokens. The intention is simple: you shouldn’t be able to bypass approval rules just because you got the “pool share” via a different mechanism.
Fix #2: Trust lines with balances were slipping through
A second proposal tackles an exception tied to trust lines that already have a token balance.
Developers found a behavior where the payment system only checked authorization when a trust line’s balance was zero. That meant if a trust line already held restricted tokens, it could continue receiving more—even if the issuer hadn’t approved it properly.
The fix would block that path, so unauthorized trust lines can’t keep piling up restricted tokens through the same workaround.
Keeping it consistent across the whole ledger
Beyond these specific issues, the overall package is aiming for consistent enforcement—so approval rules don’t get accidentally ignored when new features or existing ones are used in slightly different ways.
Also, if an account is already sitting on restricted tokens without the required authorization, the proposed rules would generally allow those tokens to be sent back to the issuer. Then the issuer can approve the trust line if they want, and normal usage can resume.
Is this about real users being harmed?
According to the XRP Ledger Foundation, the discussion is more about improving protocol safeguards than reacting to a confirmed wave of impacted users. In comments shared with CoinDesk, Hussein “Vet” Zangana said the focus was on what guarantees the protocol should provide.
The foundation also noted that the cases they’re aware of involved payments made by issuers themselves or by accounts the issuers had already approved. They claimed they haven’t seen evidence of outside parties creating unauthorized balances by exploiting the remaining exceptions.
Where things stand right now
As of the report dated October 30, the four fixes hadn’t been merged into the main software or activated on mainnet yet.
Even if the amendment makes it into the codebase, it still needs continued support from trusted validators for two consecutive weeks before activation. Validator approval matters for other upgrades too—like the separately proposed XRP Ledger Batch upgrade.
So what changes for regular holders?
If these restricted-token fixes get adopted, issuers should be able to enforce their approval requirements more consistently. For holders, the practical difference boils down to one thing: whether your account actually has the issuer’s authorization.
In other words, fewer chances to accidentally “have access” when you shouldn’t. Because the ledger is done playing hide-and-seek.
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