XRPL Developers Unveil Plan for KYC-Only Liquidity Pools

Ripple developers are exploring a new standard for XRPL that would allow banks and institutions to provide on-chain liquidity without interacting with unverified wallets.

The concept, currently an XLS Idea, proposes extending Permissioned Domains to AMMs, allowing domain owners to restrict access to liquidity pools based on credentials.

This means that only wallets holding approved credentials could deposit liquidity into the pool, participate in governance, and swap against it. The proposal also calls for a withdrawal exception to allow liquidity providers to retrieve assets if their credentials expire.

The idea aims to address a gap in XRPL's institutional DeFi infrastructure by providing a permissioned AMM that can be restricted to specific wallets, making it more attractive to banks and institutions.