Ripple’s Chief Technology Officer Confirms RLUSD Stablecoin Can Be Frozen or Reversed

Ripple’s Chief Technology Officer, David Schwartz, has made a significant announcement regarding the Ripple USD (RLUSD) stablecoin. In a recent statement, Schwartz confirmed that the RLUSD stablecoin can be temporarily halted or reversed to comply with legal or regulatory requirements.

This revelation comes in the wake of Senator Bill Hagerty’s update to the GENIUS Act, which now mandates stablecoin issuers to implement technology that allows for freezing, seizing, or stopping transfers when legally required.

The GENIUS Act, officially known as the Guiding and Establishing National Innovation for US Stablecoins Act, was introduced on February 4 and saw amendments unveiled by Senator Hagerty on March 10. One of the key changes in the bill requires stablecoin issuers to have the capability to seize, freeze, burn, or prevent the transfer of payment stablecoins issued by them.

Attorney Jeremy Hogan raised questions about the practical implications of this bill, particularly focusing on the technological requirements for stablecoin issuers to adhere to the proposed rule. In response to Hogan’s concerns, Schwartz confirmed that the freezing or clawing back of RLUSD is indeed possible.

Schwartz emphasized the importance of this functionality to ensure that the ledger’s balances align with the legal obligations of the issuer. He explained that off-ledger events, such as court orders, can alter or nullify these obligations, necessitating the ability for issuers to update the ledger accordingly.

Furthermore, the XRP Ledger (XRPL) activated the clawback amendment in January, allowing token issuers to retrieve tokens from wallets deposited into Automated Market Maker (AMM) pools to maintain regulatory compliance. As RLUSD is issued on both the XRP Ledger and Ethereum blockchains, the clawback functionality applies to it as well.

The bill also includes provisions for federal oversight of stablecoin issuers with market values exceeding $10 billion, currently applicable to Tether (USDT) and USD Coin (USDC). Meanwhile, RLUSD, launched by Ripple in December 2024, falls under state regulation but must adhere to a framework comparable to federal standards.

With a market capitalization of 135.1 million, RLUSD’s compliance with regulatory requirements and its ability to be temporarily halted or reversed as necessary underscore the evolving landscape of stablecoin regulation in the cryptocurrency industry.