Ripple has published a proposal for a lending protocol on the XRP Ledger that would enable banks and financial institutions to borrow digital assets by pledging collateral, without having to sell their token holdings. The move aims to fill what Ripple describes as a missing piece in blockchain-based finance: lending, collateral management, and credit infrastructure.
Multi-asset support with off-chain credit checks
According to the proposal, the XRP Ledger Lending Protocol would support lending markets for tokenized U.S. Treasuries, money market funds, stablecoins, commodities, private credit, and other real-world assets. Ripple noted that while tokenization has streamlined issuance and transfer, lending and credit systems have not kept pace.
The protocol separates credit decisions from on-chain settlement. Lenders and borrowers negotiate loan terms and perform compliance checks off-chain, then submit transactions to the network for execution. Ripple said this structure lets institutions retain control over underwriting and regulatory requirements while using the blockchain for standardized execution — mirroring how traditional financial markets separate credit decisions from settlement infrastructure.
Two core components: Single Asset Vault and Lending Protocol
The proposal introduces two building blocks. A Single Asset Vault pools a single token for lending, while a dedicated Lending Protocol manages loan origination, servicing, and repayment. Ripple stressed that separating custody from lending infrastructure follows the model already used in conventional capital markets.
For example, a payment provider holding RLUSD reserves could obtain short-term liquidity through the protocol while waiting for cross-border transactions to settle, avoiding the need to liquidate reserve assets or rely on more expensive bank credit lines.
Compliance controls and risk allocation
Compliance is central to the proposal. All lenders and borrowers must complete identity verification before participating, with access controlled through permissioned credentials rather than open participation. Ripple also proposed assigning first-loss capital at the lending facility level instead of distributing losses equally across all participants, creating a clearer framework for allocating credit risk.
Awaiting validator approval; devnet testing available
The lending framework has not yet been activated on the XRP Ledger mainnet. The technical specifications, published as XLS-65 and XLS-66, require approval from XRPL validators before going live. In the meantime, developers and infrastructure providers can test the proposed system on the XRPL devnet.
The proposal comes days after Elon Musk's X began rolling out X Money to a limited group of Premium+ users, using traditional banking infrastructure provided by Cross River Bank, a Ripple banking partner. Although some in the XRP community speculated this relationship could eventually support blockchain-based payments or stablecoin services, neither X nor Cross River Bank has announced plans to integrate XRP or other cryptocurrencies into the payment platform. X Money currently operates entirely through conventional banking rails.