XRP Ledger developers propose tighter controls for restricted token holders

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XRP Ledger restricted token controls

Highlights

XRP Ledger developers proposed network upgrade fixCleanup3_5_0 comprising four fixes to close approval loopholes for restricted tokens.
The upgrade requires support from more than 80 percent of trusted validators for two consecutive weeks before activation on the network.
The XRP Ledger Foundation reports no known cases of outsider exploitation and states existing unapproved balances originate from issuers or previously approved accounts.

Proposed upgrade targets approval loopholes

As reported by CoinDesk, XRP Ledger developers have proposed four fixes bundled into a single network upgrade called fixCleanup3_5_0 to close exceptions that allow restricted tokens to reach accounts without issuer consent.

The changes have not been merged into the network's main software, and they would need support from more than 80 percent of trusted validators for two consecutive weeks before going live. On the XRP Ledger, some tokens are designed to be held only in accounts approved by the issuer, typically to allow identity checks before ownership.

One proposal would require approval for both tokens in an automated market maker pool before an account can buy into it. Another would remove an exemption under which approval checks applied only to trust lines with a zero balance, allowing an account that already held tokens to continue receiving more.

Foundation says no outsider exploitation is known

The XRP Ledger Foundation says developers are reviewing how these exceptions operate, including how tokens could previously reach unapproved accounts through NFT trades before an August 2025 fix. Hussein "Vet" Zangana, director of community and product at the XRP Ledger Foundation, says the discussion is about what the protocol should guarantee rather than a report of users being affected.

According to Zangana, any unapproved balances that exist today trace back to payments made by issuers themselves or by accounts that had already been approved. The Foundation says it knows of no case in which an outside actor created such a balance by exploiting the remaining exceptions.

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