XRPL proposal would let banks hold customers’ XRP reserves

A proposed amendment to the XRP Ledger would let sponsors — banks, issuers or platforms — pay account base reserves and transaction fees for other users while customers retain control of their accounts and private keys. The change is based on the XLS-68 Sponsored Fees and Reserves draft and currently has support from six validators; 29 validators are required for activation and no activation date is scheduled.

Under current XRPL rules each account must hold a base reserve and every transaction consumes a fee paid in XRP that is destroyed when the transaction settles. The base reserve is currently set at 1 XRP per account plus 0.2 XRP per owner-reserve unit, though validators can change those parameters. With sponsorship, the XRP that backs a customer’s reserve would be recorded on the ledger as held by the sponsor while the ledger also records which party is responsible for the obligation.

A company sponsoring many otherwise empty customer accounts would add the equivalent base-reserve requirement to its balance sheet. For example, sponsoring 1,000 empty accounts would require roughly 1,000 additional XRP in base-reserve capacity under current figures. Optional Sponsorship ledger entries would let institutions prefund relationships instead of signing each subsidized transaction, but those ledger entries also consume reserve capacity.

Ripple’s head of product, Jazzi Cooper, described the feature as allowing a sponsor to “cover those costs on behalf of users,” enabling consumer and institutional applications to hide the underlying XRP mechanics from end users. Firms that worked on the proposal, including Ctrl Alt, have framed the model as a way for institutions to manage XRP requirements internally while customers use tokenized assets without holding XRP themselves.

The arrangement creates a capital-management constraint for sponsors. XRP allocated to support sponsored accounts remains committed while the sponsored account or related ledger object depends on it. A SponsorshipTransfer mechanism in the proposal would allow a sponsorship to be ended or reassigned, but a beneficiary taking over sponsorship must have enough XRP to meet the reserve requirement. That means a customer that never acquired XRP may not be able to assume reserve responsibility when a sponsor stops supporting an account unless the sponsor transfers XRP to the customer or another sponsor accepts the obligation.

Account deletion can release a reserve: once blockers are cleared, a sponsored account may be deleted and the reserve obligation returned to the sponsor with remaining XRP directed according to the proposed rules. A related code change merged into the XRPL development branch in August adds reserve checks when certain sponsorships end, but that behavior is gated behind the separate fixCleanup3_4_0 amendment; its eventual status on mainnet will affect how reserve commitments can be unwound.

How the amendment affects XRP demand will depend on sponsor behavior after activation. An institution can assign XRP already on its balance sheet to sponsored accounts without buying new tokens. Data after any activation — including the number of sponsored accounts, sponsor balances, transaction volumes and reserve units tied to tokenized assets — will show whether sponsors are accumulating new XRP or reallocating existing holdings.

The immediate next step for the proposal is validator approval and the activation period. If it reaches the required support and completes activation, banks and platforms will need to model reserve commitments, transaction-fee use and how sponsorships will be managed when customers churn or accounts close.