XLS-0096 clarifies that an XRPL token cannot have both confidential balances and a transfer fee

Serguey Asael Shinder03 November 2026, 08:221 min read

The draft standard for confidential transfers of Multi-Purpose Tokens on the XRP Ledger, XLS-0096, gained a new FAQ entry on 2 November that spells out a trade-off issuers have to make up front. The specification, created in January and now dated 22 October, already said in its section 6.4 that an issuance cannot combine a non-zero TransferFee with the flag lsfMPTCanHoldConfidentialBalance. The new entry, A.15, explains why that choice is effectively permanent.

Once confidential balances are enabled on an issuance, the flag cannot be turned off again, so that issuance can never charge a non-zero transfer fee afterwards. Going the other way, an issuance that charges a transfer fee must cut it to zero before confidential balances can be switched on, and that is only possible if the fee was not declared immutable when the token was created. If it was, the issuer would have to create a new issuance.

The entry advises issuers that expect to charge a percentage fee on transfers to decide before enabling confidential balances, and points to section 14.4 of the document for the full rationale. Elsewhere the draft notes that its design relies on EC-ElGamal over secp256k1, which is not considered quantum-safe.

What it means

This is documentation, not a protocol change, and XLS-0096 is still a draft amendment. But it turns a rule buried in the specification into a product decision issuers will meet at launch: a token can have private balances or a revenue model based on transfer fees, not both, and the choice is one-way.