Ripple's Proposal Suggests Potential Privacy Features for XRP - A Mixed Response
The XRP Ledger, a prominent blockchain platform, has recently entered a new phase in its development with the introduction of Confidential Multi-Purpose Tokens (MPTs). This amendment, proposed by Ripple engineers Murat Cenk and Aanchal Malhotra, was opened for discussion on September 13 by the XRP Ledger Standards (XRPLF).
Confidential MPTs aim to cater to the needs of institutional tokenization, where privacy, auditability, and policy controls must coexist. They utilize EC-ElGamal encryption and Zero-Knowledge Proofs (ZKPs) to provide confidential transfers and balances. The system maintains a "second account" for issuers to account for both public and confidential balances.
One of the key features of Confidential MPTs is the end-to-end encryption of balances and amounts using ZKPs. This ensures that only the holder of the key can access the information, providing a higher level of privacy. However, the XRP Ledger would continue to expose supply caps and enforce invariants, ensuring the network's existing invariant-OutstandingAmount never exceeds MaxAmount, as per the XLS-33 rule.
The proposal differentiates itself from privacy chains like Monero or Zcash by incorporating selective disclosure and issuer controls. It outlines two auditor models: an on-chain, trust-minimized approach and a simpler issuer-controlled "view key" option. The system also includes issuer-only freeze and clawback capabilities over confidential balances, framed as compliance tools.
The ledger would continue to equip XRPL with a more compact, compliance-aware fungible token primitive than legacy trustlines. Optional auditor copies of the same ciphertext are verifiably bound via ZK equality proofs. The system enables "flexible auditability" while keeping private balances "encrypted under the holder's key."
It's worth noting that the XRP Ledger's discussion on Confidential MPTs is currently in the "Discussion" stage. If passed, the XRPL amendment would require more than 80% validator approval for two weeks before activation on mainnet. At press time, XRP traded at $3.01.
The draft hardwires audit channels and issuer recourse, unlike privacy-maximalist communities. The proposal preserves the accounting semantics of XRPL's existing MPT framework and maintains public auditability. Confidential MPTs don't replace the existing MPT model; they extend it, providing a more robust and privacy-focused solution for the XRP Ledger.
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