The XRP Ledger (XRPL) is rolling out new tools to boost compliance, security, and institutional adoption. One major update is Permissioned Domains (XLS-80), which lets financial institutions create controlled blockchain environments.
Permissioned Domains set access rules for specific areas of the XRPL. Only users with verified credentials can take part in these transactions. This ensures privacy, regulatory compliance, and controlled asset flows. It moves decentralized finance (DeFi) closer to institutional standards.
This feature acts as an on-chain access control system. Institutions define rules for financial activities, recording them directly on XRPL. This provides transparency and security, helping financial entities meet compliance without third-party intermediaries.
A key function is credential gating. Institutions decide which credentials are needed to access their domain, ensuring compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. The ledger only verifies if a credential is valid without storing personal data.
Permissioned Domains also support the upcoming Permissioned DEX. This builds on XRPL’s existing decentralized exchange (DEX) but limits trading to credentialed participants. Financial institutions need greater control over transactions, and Permissioned Domains enable this.
The Permissioned DEX will have restricted orderbooks. Trading pairs will require users to hold approved credentials, ensuring that only authorized participants place orders. Institutions issuing tokenized real-world assets (RWAs) or stablecoins can create private trading spaces that comply with financial regulations.
XRPL enhances security and privacy with credentials
Instead of using separate private blockchains, the Permissioned DEX integrates with XRPL’s core DEX features. This allows institutions to participate in DeFi while meeting compliance rules and expanding regulated secondary markets for tokenized assets.
Credentials are essential for Permissioned Domains. Users must hold valid credentials before gaining access. A domain object lists accepted credentials and accounts with the required credentials automatically gain entry.
Organizations set credential requirements, such as KYC approvals from trusted issuers. Users don’t have to share personal data on-chain. Instead, they only prove they hold the necessary credentials. The network confirms if a credential is accepted by the domain.
By combining Credentials and Permissioned Domains, XRPL strengthens security, compliance, and privacy. Institutional DeFi becomes more scalable and accessible, making XRPL a key player in regulated digital asset markets.
