The XRP Ledger activated Amendment XLS-85, enabling native custody for each trustline-based token and Multi-Purpose Token (MPT). The change incorporates new on-chain vesting and conditional release tools and introduces demand for XRP through a reserve of 0.2 XRP for each asset held in custody.
The activation of XLS-85 introduces a structural change to the XRP ledger’s operation by expanding the EscrowCreate, EscrowFinish, and EscrowCancel primitives to lock and release any issued token, not just XRP.
This expands programmable custody beyond the native asset, making it a cross-cutting tool for the entire XRPL token ecosystem. Furthermore, issuers can now set time-based rules using the FinishAfter parameter and cryptographic conditions via the Condition field, enabling automated vesting, conditional payouts, and settlements linked to off-ledger proofs or oracles.
The update also adds issuer-level flags that provide more granular control over custody behavior and compliance flows. This is a significant point: by allowing token creators to align the technical mechanics with regulatory and governance requirements, a stronger foundation is laid for institutional adoption.
Demand mechanics and structural effects
One of the most relevant elements is the reserve mechanism: each custody account requires locking 0.2 XRP as a minimum reserve. This creates a permanent supply “sink” proportional to the use of custody accounts in the system. As token issuance and the use of escrow schemes increase, the demand for XRP to cover reserves and transaction fees will also grow, reinforcing a direct link between on-chain activity and structural pressure on supply.
Furthermore, XRPL maintains competitive technical advantages that could amplify this effect. Native custody, deterministic completion in approximately 3 to 5 seconds, and predictable fees strengthen its position against more expensive or congested smart contract-based chains. Added to this is the traction in tokenization of real-world assets (RWAs): the ledger hosts more than 100 tokenizations with a combined value exceeding $1.9 billion, along with reported signs of institutional interest in the market.
XRP was trading around $1.36 and showing tactical weakness, even though indicators of structural adoption appeared to be strengthening. This divergence suggests a temporary gap between the expansion of technical capabilities and the effective influx of large-scale institutional capital.
Regarding price dynamics, the impact will likely be gradual: the supply bottleneck creates structural pressure, but a sustained move will depend on the scale of adoption, institutional flows, and how quickly regulators and compliance teams validate the use of these new tools.
