The XRP Ledger Has Begun Building the Privacy Layer Banks Have Always Demanded

The $XRP Ledger may have begun building the privacy layer that banks need for blockchain adoption with the introduction of Confidential MPTs.

The $XRP Ledger developer committee is working to introduce the Confidential MPT standard (XLS-0096), which would bring transaction privacy to issued tokens on the network. The standard builds on the existing XLS-33 MPT protocol, but includes EC-ElGamal encryption and ZKPs to hide individual balances and transfer amounts.

Notably, the standard could represent an important step toward attracting banks and financial institutions to the $XRP Ledger, as it addresses the conflict between blockchain’s radical transparency and the privacy that banks require.

Key Points

• The $XRP Ledger developer committee is introducing a new standard that would allow users to transfer and hold issued tokens, hiding individual balances and transaction amounts from public view.
• The standard could attract banks and financial institutions, which have avoided public blockchains because of the radical transparency that allows anyone to see the transactions and balances of other users.
• Issuers retain full control under the new standard, including the ability to freeze accounts and forcibly recover tokens from holders where necessary.
• The Confidential MPT standard comes after the XRPL already enabled Permissioned Domains and Permissioned DEX last month, continuing a pattern of building tools to meet the compliance and privacy demands of traditional finance.

A New Standard for Confidential Tokens

Notably, the Confidential MPT specification, designated XLS-0096, was authored by XRPL contributor Shawn Xie last week under the title “Confidential Transfers for Multi-Purpose Tokens.”

The standard matters for institutional adoption because there has always been a conflict between what banks need and what blockchain offers. Specifically, blockchain runs on radical transparency, allowing anyone to see the transactions and balances of other users, which is something most banks are deeply uncomfortable with.

The standard builds on XLS-33, the existing Multi-Purpose Token framework, and adds encrypted balances and confidential transfers through EC-ElGamal encryption and zero-knowledge proofs (ZKPs), but maintains the accounting rules and supply controls of XLS-33.

The Motivation Behind Confidential MPTs

XLS-33 already supports flexible tokenization on the $XRP Ledger, but every balance and every transfer under this protocol stays fully visible to the public.

Xie stressed that this level of transparency has held back adoption in institutional and privacy-sensitive settings. He expects Confidential MPTs to address this by bringing encrypted balances and confidential transfers without abandoning the XLS-33 system.

Notably, the standard ensures that even though individual balances remain hidden, the overall token supply stays visible and auditable. Moreover, the MaxAmount (MA) field continues to cap the total supply, giving validators what they need to enforce the rule that says OutstandingAmount (OA) must be less than or equal to MA.

Four Properties from the Confidential Token Standard

Data from GitHub confirms that the design introduces four major properties. Specifically, the first is confidentiality, as the standard encrypts individual balances and transfer amounts so that validators and outside observers cannot see them. XRPL validator Vet spotlighted this in a recent post on X.

With XLS-96 we going to encrypt issued asset balances and sending amounts on $XRP.

😈 pic.twitter.com/7JNDv4wJIa

— Vet (@Vet_X0) March 9, 2026

For the second property, the standard introduces public auditability, which makes sure that the existing rule of OutstandingAmount being less than or equal to MaxAmount stays publicly enforceable without anyone needing to decrypt confidential balances.

The third property is selective disclosure and view keys, which the standard supports through two separate models. The first model is a trust-minimized, on-chain auditor approach. However, the second is a simpler model where the issuer controls the view keys and can disclose information on demand.

Meanwhile, the design includes compatibility as the fourth property. Here, public and confidential balances can exist side by side for the same token, and the system treats a designated issuer second account the same as any other non-issuer holder. Notably, this maintains XLS-33 issuance rules.

Issuer controls also carry over to confidential balances, covering freezing and clawback to the issuer’s reserve. The standard keeps OutstandingAmount as the total of all non-issuer balances.

What This Means for Banks and Institutional Adoption

$XRP proponents believe this standard represents a move toward making the $XRP Ledger genuinely attractive to financial institutions, particularly banks. Notably, most banks want their transactions kept private, and the Confidential MPT standard makes this possible for issued tokens. Note that the standard does not involve $XRP, only issued tokens.

Interestingly, the XRPL developer community has now focused on this standard after enabling Permissioned Domains and Permissioned DEX last month, two compliance tools that allow banks and financial institutions to adopt the XRPL within an environment that complies with global regulatory demands.

At press time, the Confidential MPT standard remains a proposition under active discussion on GitHub and has not yet made its way to the XRPL validator poll as an amendment.