What Is RLUSD and How Does It Work on XRPL?

Ripple Launched a Stablecoin. Here's What That Actually Means

In December 2024, Ripple received approval from the New York Department of Financial Services to issue RLUSD, a USD-backed stablecoin. It launched on both the XRP Ledger and Ethereum. If you've used USDC or USDT before, the concept is familiar. One token equals one US dollar. But how RLUSD works on XRPL is specific to that ledger's architecture, and the details matter if you want to hold or use it safely.

This post walks through what RLUSD is, how it's issued, and what you need to do to receive and send it on XRPL.

What RLUSD Is

RLUSD is a fiat-backed stablecoin issued by Ripple. Each token is backed 1:1 by US dollar deposits, US government bonds, or cash equivalents held in reserve. Ripple publishes monthly attestations of those reserves through third-party auditors.

On XRPL, RLUSD is not a native token like XRP. It's an issued currency, sometimes called an IOU. That distinction shapes everything about how you interact with it.

How Issued Currencies Work on XRPL

XRPL has a built-in system for tokenized assets. Any account can issue a token, and any account can hold one. But to hold an issued currency, you need to create a trust line.

A trust line is a two-way accounting relationship between your wallet and the issuing account. It tells the ledger two things: you recognize this issuer, and you're willing to hold up to a certain amount of their token.

For RLUSD, the issuer is Ripple's designated issuing account on XRPL. Before any RLUSD can land in your wallet, your wallet must have a trust line to that account set up.

Here's the step-by-step flow:

You identify Ripple's RLUSD issuing address on XRPL.
You send a trust line transaction from your wallet to that address, specifying RLUSD as the currency and setting a limit.
Your wallet can now receive RLUSD.
When someone sends you RLUSD, the ledger records it as a balance on that trust line.

Without step 2, any attempt to send RLUSD to your wallet will fail. The ledger enforces this.

The Reserve Requirement for Trust Lines

Creating a trust line isn't free in the traditional sense. On XRPL, every object you add to your account, including trust lines, increases your account's reserve requirement.

The base reserve is 10 XRP. Each additional object, like a trust line or an open offer, adds 2 XRP to your required reserve. That XRP isn't spent. It's locked in place as long as the object exists. When you delete the trust line, that 2 XRP becomes spendable again.

This means holding RLUSD costs you 2 XRP in locked reserves. That's a structural cost you should factor in before setting up the trust line.

How RLUSD Moves on the Ledger

Once your trust line is set up, sending and receiving RLUSD works like most token transfers. You specify the recipient address, the currency code (RLUSD), the issuer address, and the amount.

One thing that makes XRPL different is the Decentralized Exchange, or DEX, built directly into the ledger. RLUSD can be traded against XRP or other issued currencies without leaving the ledger. If you send a cross-currency payment, XRPL's pathfinding can route it through the DEX automatically.

For example, if you want to pay someone in XRP but you only hold RLUSD, XRPL can convert it in a single transaction. The DEX handles the swap. No separate bridge or protocol is needed.

Ripple's Role as Issuer

Trust in RLUSD depends on trust in Ripple as the issuer. This is not the same as trustless DeFi. Ripple controls the issuing account. If Ripple chose to freeze balances, clawback funds, or halt issuance, they have technical mechanisms to do that under XRPL's token framework.

XRPL gives issuers optional flags: GlobalFreeze, NoFreeze, and Clawback. Whether Ripple has enabled or disabled these on their RLUSD issuing account is something you can verify by inspecting the account's flags on-chain. A stablecoin with clawback enabled carries different risk than one where the issuer has permanently waived that right.

This is not unique to RLUSD. Any issued currency on XRPL carries these considerations. Knowing the issuer's account settings before you trust them is basic due diligence.

Verifying the Trust Line Before You Set It Up

Before you create a trust line to any account, you should confirm you have the right issuer address. Scam tokens use similar currency codes and fraudulent addresses to mimic legitimate assets. If you set up a trust line to the wrong account and receive tokens from them, those tokens aren't real RLUSD.

The steps to verify:

Get the official RLUSD issuer address from Ripple's documentation or a trusted source.
Look up that account on an XRPL explorer like XRPL.org.
Check the account flags for freeze and clawback settings.
Confirm the account is active and has issued RLUSD to other accounts.

Only then should you create the trust line.

How Rhyzlo Fits Into This

Setting up trust lines manually requires you to understand the transaction format, get the issuer address right, and set an appropriate limit. For users new to XRPL specifics, that's a lot of steps where a mistake can mean trusting the wrong account.

Rhyzlo's trust line management tools let you inspect, create, and monitor trust lines with verified issuer data. You can see account flags for any issuer before committing, which means you know exactly what you're trusting before XRP is locked into reserves.

RLUSD vs XRP: When to Use Each

XRP and RLUSD serve different purposes on the ledger.

XRP is the native asset. It's used to pay transaction fees, fund reserves, and serve as a bridge currency in cross-currency payments. Its value floats with the market.

RLUSD is stable. One token is meant to equal one dollar. It's useful when you want to hold value on-chain without exposure to XRP's price movements, or when you need a dollar-denominated token for payments or DeFi activity.

You'll likely use both. XRP keeps your account funded. RLUSD carries the value you want to keep stable.

Key Things to Remember

RLUSD is an issued currency on XRPL, not a native asset. You need a trust line to hold it. Creating that trust line locks 2 XRP in reserve. The trust line connects you to Ripple's issuing account, and you should verify that address before setting it up. RLUSD can move through XRPL's built-in DEX for cross-currency payments. And like any stablecoin, the guarantees behind it depend on the issuer.

XRPL's architecture makes stablecoins like RLUSD possible without smart contracts or external bridges. But it also puts more responsibility on you to understand what you're trusting.

If you want to verify issuer settings and manage your XRPL trust lines safely, Rhyzlo gives you the tools to do it. Check trust line infrastructure and account flags at rhyzlo.com.