Ripple CTO David Schwartz Explains RLUSD Stablecoin’s Major Feature

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Ripple CTO David Schwartz recently addressed an important question about Ripple’s RLUSD stablecoin. His response clarified why RLUSD can be frozen or clawed back, a topic that emerged following legal expert Jeremy Hogan’s discussion on a proposed stablecoin bill.

RLUSD Stablecoin’s Key Feature

Jeremy Hogan, a well-known attorney and XRP enthusiast, shared his thoughts on a new stablecoin bill. He questioned whether stablecoins like RLUSD or USDC could be frozen after being transferred. Thus an X user then brought this question to Schwartz, seeking his explanation.

David Schwartz confirmed that RLUSD can indeed be frozen or clawed back. He explained that this feature is essential for maintaining accurate balances on the ledger. 

According to him, legal obligations of the issuer must always be reflected correctly, and off-ledger events, such as court orders, can change these obligations.

How Does This Feature Works?

An XRPL validator named Vet joined the discussion, further explaining that both Ethereum and the XRP Ledger allow RLUSD to be frozen or clawed back if law enforcement or a court order requires it. 

The clawback function allows Ripple, as the issuer, to take back tokens under certain conditions. This is useful in cases of fraud, criminal activity, or when tokens are mistakenly sent to the wrong address.

Meanwhile, this aligns with Schwartz’s statement, showing that this feature is built to ensure legal compliance while maintaining transparency and security.

Clawback Feature Already Approved on XRPL

In January, the XRP Ledger approved a clawback amendment, which allows issuers to retrieve tokens under certain conditions. This amendment also ensures that frozen tokens cannot be deposited into Automated Market Makers (AMMs).

With this amendment in place, RLUSD can now be traded directly on the XRP Ledger’s decentralized exchange (DEX), offering more flexibility while maintaining legal compliance.