XRP Ledger version 3.3.0 introduces a new privacy feature for tokenized assets through the Confidential MPT amendment, formally listed as XLS-0096. Released on Aug. 6, the update allows issuers of Multi-Purpose Tokens to hide balances and transfer amounts on-chain while leaving the sending and receiving accounts publicly visible.

The change is available in the software but is not yet active on the network. Like other XRPL amendments, it still requires support from at least 80% of trusted validators for two straight weeks before the rules are enforced.

What the amendment changes

Confidential MPT replaces plaintext per-account balances for Multi-Purpose Tokens with encrypted values. When a transfer is made, the amount is also encrypted, so outside observers can see that a transaction happened and which accounts were involved, but not how much was sent or what balances remain.

The system uses EC-ElGamal encryption together with Pedersen commitments and Bulletproof range proofs. Validators are not expected to decrypt balances to verify a transfer. Instead, they rely on zero-knowledge proofs designed to show that no balance has gone negative and that the total supply remains consistent.

The privacy model is not universal across XRPL assets and it is not user-selected on a transaction-by-transaction basis. The issuer decides when creating a new MPT whether confidential balances and transfers will be enabled.

Issuer-controlled privacy, not a privacy coin model

The design differs sharply from networks such as Monero, where sender, receiver, and amount are hidden by default, and from Zcash, where shielded transactions are optional but user-driven. On XRPL, account visibility remains public and privacy is controlled at issuance rather than by individual holders.

According to the source material, issuers that opt into Confidential MPT can still designate authorized parties such as auditors, regulators, or compliance officers to decrypt and inspect the underlying amounts. Existing control features including freeze and clawback also remain available.

That structure could make the feature more compatible with institutional use cases than fully opaque privacy systems, though the article notes that regulators have not yet given a settled answer on how such issuer-gated encryption will be treated in practice.

Part of a broader protocol expansion

Confidential MPT arrived alongside four other proposals in the same 3.3.0 release: BatchV1_1, Sponsor, DynamicMPT, and Permission Delegation. Together they amount to the largest single protocol expansion described in the source article for XRPL.

BatchV1_1 allows up to eight transactions across different accounts to settle atomically in a single ledger close. Sponsor lets a third party cover transaction fees and reserve requirements, which means users could transact without holding XRP themselves. DynamicMPT adds mutable token properties, while Permission Delegation introduces more granular account access controls.

The article also says a $550,000 Sherlock security contest found 96 vulnerabilities across the five amendments before mainnet deployment. Two critical issues highlighted were a signature-validation bypass in Batch and a Permission Delegation flaw that could have enabled repeated fee charges to drain balances silently.

Potential reach and what comes next

More than $530 million in tokenized assets already live on XRPL, according to the source article, and those issuers could choose to adopt encrypted balances if the amendment activates. Named examples include Ondo Finance with $212.6 million, VERT Capital with $116.1 million, and Archax with $55.4 million. The same article estimates roughly $1.38 billion in tokenized real-world assets on the ledger overall.

The next confirmed step is validator voting. Confidential MPT is live in the 3.3.0 codebase, but it will only take effect if support from trusted validators reaches and maintains the 80% threshold for two consecutive weeks.

Beyond activation, the main open questions are whether issuers actually opt in and how regulators respond. The source article points to MiCA enforcement in Europe and the US Digital Asset Market Clarity Act as key areas to watch, while noting that any claim of compliance through issuer-authorized access for regulators still remains untested.

Source: crypto.news