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Ripple CTO David Schwartz confirmed that the RLUSD stablecoin can be frozen or clawed back.
He explained that this ensures the issuer’s legal obligations remain accurate, especially when external factors like court orders affect them.
His comments came after discussions on X regarding the proposed stablecoin bill and regulatory concerns.
RLUSD’s Clawback Feature Explained
The discussion began when legal expert Jeremy Hogan questioned whether stablecoins like RLUSD and USDC could be frozen after transfer.
A user directed the inquiry to Schwartz, who confirmed that RLUSD includes a clawback function to maintain compliance.
This feature allows Ripple to align on-ledger balances with off-ledger legal requirements.
According to Schwartz, regulatory requirements led to the implementation of the clawback feature.
According to Schwartz, XRPL’s legal obligations need constant adjustment because of law enforcement decisions and court judgments.
By enabling this function, Ripple ensures compliance and prevents discrepancies in financial records.
A validator supporting the XRP Ledger network named Vet confirmed Schwartz’s explanation.
Vet confirmed that Ripple can freeze or claw back RLUSD on Ethereum and the XRP Ledger.
The system performs this limitation for legal enforcement purposes or judicial court requirements.
How Clawback Works in Stablecoins
Under defined circumstances, token issuers can use the clawback function to retrieve their assets.
Through this mechanism, token issuers fulfill financial regulatory requirements and prevent fraudulent activities.
Built-in clawback functionality enables the legal transparency feature in many stablecoins.
The XRP Ledger enabled clawback functionality after an amendment was approved in early 2024.
Stablecoin issuers now have the capability to regain their tokens after accidental release through this function.
The system supports the execution of legal decisions pertaining to digital assets held on the blockchain.
Crypto users have discussed the acceptability of the clawback protocol.
Users disagree about whether this feature weakens decentralized systems while it takes an essential position in asset protection.
Implementing such functions has become mandatory for regulatory bodies due to their risk reduction and accountability enforcement function.
Clawback’s Role in XRP Ledger’s AMM and DEX
XRP Ledger implemented a clawback amendment that operates on its AMM and DEX systems.
The community approved the amendment with more than 90 percent support until it became activated.
The added safety measure blocks frozen tokens from entering AMM pools to protect against liquidity problems.
From the time the amendment comes into effect, issuers gain the power to retrieve tokens put into AMM pools.
Frozen assets and restricted balances cannot affect the trading environment under this amendment.
Because of these enhancements, the regulatory compatibility of the XRP Ledger’s DEX has increased.
With the clawback feature enabled, Ripple can enforce compliance measures on RLUSD transactions.
The mechanism maintains user protection from scams and follows required legal regulations.
The XRP Ledger continuously updates its features to follow changes in regulatory requirements.
XRP Ledger’s Integration with RWA.xyz
The XRP Ledger now integrates with RWA.xyz, which provides platform services for tokenized asset analysis.
The collaborative system provides immediate information about tokenized treasury funds alongside stablecoin processing data.
RLUSD data is now accessible for deeper market analysis. Through the integrated system, users can monitor assets between addresses on the XRP Ledger.
Transparency capabilities have increased while financial institutions gain better insights into digital asset market movements.
The addition of RLUSD data supports increased adoption and institutional confidence.
RWA.xyz’s analytics platforms provide real-time blockchain-based financial instrument tracking systems.
When XRP Ledger data is integrated into the system, market intelligence and decision-making power improve.
These agreements show how digital real-world assets continue to gain weight as market drivers in the emerging digital market system.
