Ripple CTO David Schwartz Addresses Important Question About RLUSD Stablecoin

input: 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

Ripple CTO David Schwartz recently touched upon an interesting question regarding Ripple’s RLUSD stablecoin. The question arose from legal expert Jeremy Hogan’s discussion on a proposed stablecoin bill.

As shared by an X user, Hogan discussed a new bill proposed by Rep. Maxine Waters (D-CA) that would create a new regulatory framework for stablecoins.

Hogan highlighted a key aspect of the bill, which is the ability for the government to freeze stablecoins if there is an emergency. However, he questioned how this would work in practice, especially after the stablecoins are mixed or sold.

This question prompted another X user to ask Schwartz directly whether RLUSD can be frozen or clawed back.

Schwartz confirmed that it can, adding that this feature is crucial for keeping the balances on the ledger correct. He further noted that the issuers’ legal obligations must always be reflected accurately, and off-ledger events, such as court orders, can change these obligations.

XRPL validator, Vet, joined the conversation, explaining that both Ethereum and the XRP Ledger allow RLUSD to be frozen or clawed back if required by law enforcement or a court order.

The clawback function permits Ripple, as the issuer, to take back tokens if the tokens are used for fraud, criminal activity, or if they are accidentally sent to the wrong address.

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

Earlier this year, in January, the XRP Ledger approved a clawback amendment, which enables issuers to claim back tokens if they are used for fraud or other illegal activities.

This amendment also ensures that frozen tokens cannot be deposited into AMMs.

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