Ripple's Chief Technology Officer David Schwartz has confirmed that the company's RLUSD stablecoin can be temporarily frozen or retrieved to comply with legal and regulatory requirements. His statement addresses concerns about the feasibility of implementing key provisions in the recently updated GENIUS Act, which mandates such capabilities for stablecoin issuers.
The Guiding and Establishing National Innovation for US Stablecoins Act was introduced on February 4, with Senator Bill Hagerty unveiling an amended version on March 10. The updated legislation specifically requires that permitted payment stablecoin issuers implement technology to "seize, freeze, burn, or prevent the transfer of payment stablecoins" when legally mandated to do so. This requirement has raised questions about whether major stablecoin issuers possess the technical capabilities to comply.
Attorney Jeremy Hogan publicly questioned these implications on social media platform X. "So, can Ripple or Circle actually freeze RLUSD or USDC once it's transferred? I didn't think that was possible for either," Hogan posted.
Schwartz responded directly, stating, "RLUSD can be frozen or clawed back." He emphasized that this functionality exists to ensure ledger balances accurately reflect legal obligations. Since court orders and other off-ledger events can change these obligations, issuers need mechanisms to update their ledgers accordingly.
The technical foundation for this capability was established in January when the XRP Ledger activated the clawback amendment following a 90% approval vote from its community. This feature enables token issuers to retrieve tokens from wallets that have been deposited into Automated Market Maker pools, thereby maintaining compliance with regulatory requirements.
RLUSD, which launched on December 17, 2024, is issued natively on both the XRP Ledger and Ethereum blockchains. The clawback functionality applies to the stablecoin across these platforms, ensuring comprehensive regulatory compliance regardless of which blockchain hosts the tokens.
The GENIUS Act also establishes different regulatory frameworks based on market capitalization. Stablecoin issuers with market values exceeding $10 billion fall under federal oversight, while smaller issuers remain under state regulation following comparable standards.
Currently, only Tether and USD Coin meet the threshold for federal oversight. RLUSD, with its relatively modest market capitalization of 135.1 million according to BeInCrypto data, will remain under state regulation for the foreseeable future.
The clarification from Schwartz highlights Ripple's proactive approach to regulatory compliance as the stablecoin landscape continues to evolve under increasing scrutiny from lawmakers. This development suggests that major stablecoin issuers are designing their technologies with regulatory requirements in mind, potentially smoothing the path for wider adoption within compliant frameworks.