XRP Ledger Drops AMMClawback: More Compliance, More DeFi Liquidity

The XRP Ledger (XRPL) has activated the AMMClawback amendment, a big upgrade to improve regulatory compliance and DeFi.

With 91.43% validator consensus this adds new rules for AMM pools, allowing token issuers to retrieve assets under certain conditions and opens up to institutional participation.

AMMClawback Enhances Compliance for AMM Pools

The AMMClawback amendment, as per XRPScan, introduces more strict rules for liquidity pools especially for tokens with regulatory requirements. Token issuers can now retrieve assets from AMM pools if a token is frozen, to prevent unauthorized transactions. This ensures liquidity pools are compliant with regulatory standards, addressing asset control and security concerns.

It also prevents deposits into liquidity pools if one of the paired tokens is frozen. This prevents users from adding new assets to pools with frozen tokens, further securing the ecosystem. This is part of the broader effort to bring institutional grade compliance to decentralized networks, as seen with Ondo Finance’s recent push for tokenized assets on XRPL.

RLUSD Joins XRP in AMM Pools

One of the biggest outcome of the AMMClawback amendment is the ability to create an XRP/RLUSD AMM pool. Ripple USD (RLUSD), a stablecoin launched in December 2024, was not able to participate in AMM pools because of its clawback feature. With the new amendment, RLUSD holders can now add liquidity and trade seamlessly on the XRP Ledger.

This will increase liquidity for both XRP and RLUSD and DeFi on XRPL. Since its launch RLUSD has been listed on major exchanges and its reserve report has confirmed strong backing and has boosted investor confidence. Its recent listing on Margex has expanded its reach in high-leverage trading.

New Rules for Wallets and Token Issuers

The AMMClawback amendment introduces more strict deposit rules for liquidity providers. If one of the paired tokens is frozen, wallets cannot deposit single-sided or double-sided assets into an AMM pool. Unauthorized accounts can only deposit once if the paired asset is allowed.

Token issuers must now use the AMMClawback function to retrieve assets from pools, instead of the standard clawback transaction. This structured approach ensures compliance without disrupting normal trading. The amendment passed with 28 out of 35 validator votes, more than the 80% required.

Key Takeaways:

• Regulatory Compliance: AMMClawback enables token issuers to retrieve frozen assets.

• RLUSD Integration: XRP/RLUSD AMM pools now possible, boosting DeFi liquidity.

• Stricter Rules: New deposit rules enhance security and compliance for AMM pools.

• Institutional Growth: Amendment aligns XRPL with institutional-grade standards.

The AMMClawback amendment marks a significant step forward for the XRP Ledger, enhancing its regulatory compliance and expanding its DeFi capabilities. As RLUSD joins XRP in AMM pools, the ecosystem is poised for increased liquidity and institutional adoption.