Ripple backs XRPL upgrade to enable on-ledger lending

Ripple is supporting two proposed technical standards for the XRP Ledger, XLS-65 and XLS-66, that would enable on-ledger lending. The proposals would add Single Asset Vaults and a lending layer to let approved borrowers draw fixed-term loans against assets held on the ledger. Both standards must receive approval from XRPL validators before they can be activated on the main network.

Under the designs, a Single Asset Vault would pool one type of issued asset on-chain. The lending layer would allow loans from those pools with the ledger enforcing interest accrual, repayment schedules and default procedures. Credit decisions, underwriting, legal agreements and compliance checks would remain off-chain; the ledger would standardize and execute loan mechanics once terms are agreed.

Developers and infrastructure providers can begin testing the features on a development network. If validators approve the proposals and institutions participate, vaults would hold a single asset, approved borrowers could access liquidity under agreed terms, and the ledger would automate loan accounting and enforcement.

Potential users cited by Ripple include payment firms, market makers and treasury desks. One example is a payments company holding RLUSD, Ripple’s U.S. dollar-backed stablecoin, which could borrow from an approved vault to cover a short-lived settlement gap and repay when funds arrive. RLUSD’s market capitalization stands at about $1.56 billion since its late-2024 launch. Use of issued assets in vaults would not automatically make XRP the borrowed asset; XRP would remain the ledger’s native token for fees and anti-spam measures.

A security re-audit by blockchain firm Halborn, updated June 12, identified five issues and found no critical or high-severity vulnerabilities. The report listed one medium-risk finding — a vault maximum-assets bypass via loan interest — which Halborn marked as resolved. Two low-risk and two informational items were noted and reported as addressed, acknowledged, or accepted. The review highlighted edge cases around cascading defaults, vault freezes, grace periods and cover-rate settings.

Market context includes a rebound in crypto-backed lending volumes. Loan volume across crypto reached $67 billion in the first quarter of 2026, an increase of nearly 50% from a year earlier. On-chain credit markets include large decentralized protocols and private permissioned systems; Ripple’s proposal is designed to keep ledger execution public while allowing credentials-based access to certain pools when compliance requires restricted counterparty control.

Ripple Chief Executive Brad Garlinghouse noted the scale of traditional payments and clearing activity tied to businesses the company has acquired, saying, “The businesses we’ve acquired process about $16 trillion in annual payments and clearing activity, while digital assets account for close to zero percent of that volume.” He described the company’s work as an effort to bring traditional finance functions such as stablecoin, payments, custody and treasury infrastructure onto blockchain rails.

Approval by XRPL validators and uptake by institutional participants will determine whether the standards produce sustained on-chain lending volume. The proposals aim to provide a predictable execution layer for loans while leaving underwriting and compliance checks to off-chain processes.