RippleX Introduces Token Escrow on the XRP Ledger: Unlocking Conditional Settlements for Stablecoins and Tokenized Assets
In a significant upgrade to the $XRP Ledger (XRPL), RippleX—the development arm focused on advancing the ecosystem—has activated Token Escrow via the XLS-85 amendment. This feature, which went live on the XRPL mainnet on February 12, 2026, extends the ledger's native escrow functionality beyond just XRP to include all Trustline-based tokens (IOUs) and Multi-Purpose Tokens (MPTs). This expansion opens the door for secure, conditional, and programmable handling of a wide range of assets, including stablecoins like RLUSD and tokenized real-world assets (RWAs).
What Is Escrow on the XRP Ledger?
Escrow on the XRPL is a built-in mechanism that allows users to lock funds (previously only XRP) until specific conditions are met. These conditions can be time-based (e.g., release after a set date) or fulfillment-based (e.g., cryptographic proof). Once locked, the assets cannot be spent, transferred, or destroyed until the escrow is finished by the recipient, canceled by the sender (if allowed), or expires.
The system is enforced directly by the ledger's consensus protocol, eliminating the need for third-party intermediaries and providing tamper-proof, automated execution. This makes it ideal for trustless agreements, such as delayed payments, collateral holding, or milestone-based releases.
Prior to XLS-85 (also referred to as the TokenEscrow amendment), escrow was limited to XRP—the native cryptocurrency of the XRPL. Token Escrow removes this restriction, allowing issuers and users to apply the same secure locking to fungible tokens issued on the network.
Key Details of the Token Escrow (XLS-85) Upgrade
The XLS-85 amendment was enabled with strong validator consensus (88%, or 30 out of 34 validators) and integrated into rippled version 2.5.0 (with later references to version 3.1.0 in related updates). It enhances core transaction types:
EscrowCreate: Locks the specified amount of a supported token.
EscrowFinish: Releases the escrowed assets upon meeting conditions.
EscrowCancel: Returns assets to the sender if conditions aren't met or the escrow expires.
For tokens to be eligible:
Trustline-based tokens (IOUs) require the issuing account to enable the Allow Trust Line Locking flag.
Multi-Purpose Tokens (MPTs) need both Can Escrow and Can Transfer flags enabled.
Token escrows must include a Cancel After time (unlike pure XRP escrows, which can be conditional-only).
If the token requires authorization, both sender and recipient must be pre-authorized by the issuer.
Creating a token escrow also incurs a small reserve requirement—typically around 0.2 XRP—to cover the ledger object storage, aligning with XRPL's anti-spam reserve model.
Benefits for Regulated Institutions and On-Chain Settlements
This upgrade positions the XRPL as a more robust platform for institutional DeFi and compliant finance. Regulated entities can now perform conditional, compliance-friendly settlements directly on-chain. Examples include:
Delivery-versus-Payment (DvP): Simultaneously settling two assets (e.g., tokenized securities against stablecoins) only when both sides fulfill obligations.
Structured payouts: Time-locked or condition-based distributions, such as vesting schedules, milestone payments, or collateral releases.
Secure holding of stablecoins and RWAs: Locking assets like RLUSD (Ripple's USD-backed stablecoin) or tokenized treasuries for automated, programmable execution.
These features reduce reliance on off-chain custodians or intermediaries, lowering costs, risks, and settlement times while maintaining regulatory controls like authorization, freeze, and clawback options native to XRPL tokens.
Analysts, including insights from NS3.AI, highlight that Token Escrow enables regulated institutions to conduct these processes natively on the blockchain, enhancing transparency and auditability.
Adoption Considerations and Potential Impact on XRP Demand
While the feature is now live, widespread use depends on token issuers enabling the necessary flags (e.g., Allow Trust Line Locking) and integrating escrow into their workflows and applications.
The XRPL's reserve model—requiring XRP to create and maintain ledger objects like escrows—could drive additional demand for XRP as adoption grows. Each new escrow creates a ledger entry, consuming a portion of the owner's reserve (and potentially the base reserve). If institutions and projects increasingly tokenize assets and use escrow for settlements, this could lead to more XRP being locked up in reserves, tightening supply dynamics in the long term.
Looking Ahead
Token Escrow marks another step in RippleX's efforts to make the XRPL a premier layer for tokenized finance, stablecoin payments, and institutional use cases. By extending programmable primitives to the full token ecosystem, the ledger becomes more versatile for everything from cross-border stablecoin transfers to complex RWA structures.
As more issuers and developers adopt this capability, the XRPL could see accelerated growth in on-chain activity—further solidifying XRP's role as the fuel for a maturing, enterprise-ready blockchain.
