Key Takeaways
- XRP Ledger developers are working on Confidential Transfers for Multi-Purpose Tokens, which would hide individual token balances and transfer amounts from the public ledger.
- The design uses encryption and zero-knowledge proofs while retaining mechanisms for issuers, auditors, and other authorized parties to verify information when required.
- The feature remains in development and is not currently active on XRPL, making validator approval and implementation the next major hurdles.
The XRP Ledger is moving toward confidential token transfers as developers work to solve one of the biggest tensions facing institutional blockchain adoption: how to use a public ledger without exposing every position and transaction to the market.
The proposed ConfidentialTransfer amendment would introduce privacy for Multi-Purpose Tokens, or MPTs, XRPL’s token standard designed for assets such as tokenized securities and other real-world assets.
Under the XLS-96 specification, individual MPT balances and transfer amounts would be encrypted rather than publicly visible to validators and outside observers. The system uses EC-ElGamal encryption and zero-knowledge proofs to validate transactions without disclosing the underlying amounts.
That represents a significant change from the existing MPT architecture, where balances and transfers are transparent. XRPL documentation currently lists ConfidentialTransfer as “In Development,” with a default validator vote of “No,” meaning the proposal should not be treated as a live network feature.
Privacy Without Making Token Supply Invisible
The proposal is not designed to turn XRPL into a fully private blockchain.
Instead, it attempts to separate transaction-level privacy from system-level auditability.
While individual confidential balances would be encrypted, validators could continue enforcing limits on how many tokens an issuer has created. XLS-96 introduces accounting mechanisms that preserve the relationship between outstanding supply and an issuer’s maximum permitted supply without requiring validators to decrypt individual positions.
That distinction could be particularly important for financial institutions.
Banks, asset managers, and token issuers may not want competitors to see the size of every client position or transaction, but regulators and auditors can still require access.
XLS-96, therefore, includes selective disclosure. One model encrypts information under an auditor’s public key, while another allows issuers to provide read-only access through view keys. The specification also preserves issuer controls, including freezing and clawback for confidential assets.
XRPL Builds Out Institutional Tokenization Stack
Confidential transfers fit into a broader XRPL effort to build financial infrastructure around tokenized real-world assets.
Multi-Purpose Tokens already allow issuers to embed supply limits, metadata, transfer restrictions, and compliance controls directly at the protocol level rather than relying entirely on custom smart contracts. XRPL documentation lists assets such as Treasury bills among potential MPT use cases.
Elsewhere, XRPL has been developing Permissioned Domains, which use credentials to determine who can access restricted financial environments. The architecture is intended to support products such as permissioned decentralized exchanges and institutional lending.
Confidential transfers would address a different piece of that puzzle: commercial privacy.
A permissioned system can determine who is allowed to transact, but it does not automatically prevent the values and holdings of transactions from becoming publicly visible. XLS-96 attempts to add that missing layer while retaining compliance access.
Confidential Transfers Do Not Apply to XRP
There is also an important limitation.
The current proposal applies to MPTs, not native XRP transfers.
Developers behind the specification have explicitly noted that extending similar confidentiality to XRP would require separate protocol-level changes because native XRP and MPTs use different ledger structures and accounting rules.
XLS-96 is also still formally classified as a draft, while the latest stable XRPL server release is version 3.2.0.
That leaves confidential transfers as a development-stage feature rather than an immediate network upgrade. But the direction is clear: XRPL’s institutional tokenization strategy is increasingly moving beyond simply putting assets onchain toward providing the privacy, compliance and issuer controls required to manage them there.
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Dr. Guneet Kaur is a senior editor at CCN.com and a Science Fellow at Exponential Science. She is a fintech and blockchain expert with extensive experience in digital finance education, blockchain ecosystems, and cryptocurrency markets. She has worked with global media such as Cointelegraph, as well as education and blockchain platforms, to design and lead strategic content and learning initiatives. As an educator and assessor for top-tier executive programs, she bridges real-world fintech trends with academic insight.
Dr. Kaur is also a published researcher and peer reviewer across fintech and data science journals, including Financial Innovation Journal and International Journal of Big Data Intelligence and Applications. Her work spans data-driven analysis, Web3 innovation, and technical content development. With a strong foundation in both industry and academia, she translates complex financial technologies into practical applications, empowering learners, professionals, and institutions across the rapidly evolving digital finance landscape.
