In this video, we dive into the groundbreaking advancements in digital asset management made possible by the XRPL and the proposed XLS-64D amendment. Learn how this amendment could help you securely escrow your assets and delegate them for yield generation or use them as collateral without ever losing ownership. We discuss the technicalities of pseudo-accounts, trust lines, and the broader implications for institutional adoption and compliance with upcoming regulations.
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00:00I've been talking about the capability to escrow your assets and delegate them for an extended period of time out of qualified custody because we do have qualified custody for our family office clients through Digital Ascension Group.
00:12And finally, we have validation that that is exactly what's going to happen utilizing the XRPO.
00:20If you haven't looked into XLS 64D, it's an amendment that has been proposed to the XRPO that allows for pseudo accounts and the representation or ownership of the assets in those accounts to be delegated to some type of mechanism to earn a yield or a line of credit via a trust line.
00:41And so that's the technical way this is. But in reality, what this means is you will be able to hold your assets on a cold wallet in institutional custody with KYC and a lot of the prerequisites that we've discussed in other videos and the other amendments that have been proposed are going to have to be passed before this is realized.
01:03But what I've been talking about for a long time is exactly what's going to work out.
01:07So you'll be able to escrow your assets in that cold wallet in qualified custody with the insurance and then delegate its representation into an AMM, liquidity pool, other DeFi protocols where the ownership or again, kind of a derivative of that asset is represented in that environment to be able to do whatever you want to do.
01:32All the cool, all the cool, sexy stuff that people want. I don't want to be able to earn a yield with my assets or borrow against them or put them in a smart contract.
01:42All that's coming. And that's because of XLS 64D, which allows for the pseudo accounts and the representation of the ownership of whatever is being delegated as its representation over there.
01:55And what this really does is it mitigates risk of loss. Right. So I've talked about this in the AMMs before. Right now, you have to put your XRP into the pool and it's swapped for the LP tokens.
02:06Well, that's not any good because if you do have impermanent loss or XRP goes up substantially while the other asset that it's trading against doesn't, you're going to lose out on those potential gains.
02:16Right. And so the best situation would be that you have your XRP locked up in escrow and it's delegated.
02:26The ownership of it is delegated into this liquidity pool represented in LP tokens.
02:32You can also do this with other fungible assets on the XRP ledger.
02:36So stable coins like Ripple stable coin that they're going to be launching here in the near future.
02:41That's dollar denominated and pegged.
02:44You'll be able to lock that in escrow and delegate it into the pool where it's represented.
02:49If the asset itself appreciates in the escrow lock, and we'll have to orchestrate this with our firm and the way it works,
02:57but anything in excess of like 125% of the LTV or loan to value ratio or the amount that you originally put in the pool would be unlocked out of the escrow
03:06and then you'd be able to use it in whatever other means you wanted to.
03:10So then you don't have any impermanent loss.
03:13There's no way that you could lose the original asset.
03:16It stays in your position the whole time.
03:18You can see it right there locked in escrow on the ledger,
03:21and you're still able to earn yields or use it in some other fashion without ever, you know, potentially losing the asset.
03:30This also works for trading, right?
03:32So let's say you want to hold your asset in qualified custody, but you want to swap it for, you know,
03:39let's say you want to trade it for Bitcoin or you want to trade it for stablecoins, okay?
03:42You want to exit your position.
03:44You will no longer have to send it, which is scary, especially if it's a lot of money,
03:48from one wallet to the exchange, right?
03:50If you fat finger something or mess something up or it doesn't land immediately.
03:56No, you've all had that situation if you've dealt with digital assets.
03:59Now you can just delegate that trade line onto the exchange and lock it in escrow.
04:05That's then represented in their environment as the collateral that you can then exchange for whatever,
04:11and it'll atomically settle with that account or the pseudo account there in qualified custody via the trust line.
04:17So huge, huge implications for broader adoption of the XRPL, uh, the compliance and the regulatory components, uh, of this and, um,
04:28the custody rule that was proposed by the SEC in early 23, I believe it was February of 2023.
04:34Um, this directly aligns with that.
04:37So for me, if I'm looking at whatever network is probably going to be, uh, what moves all the money, uh,
04:45it's probably going to need work to work within the confines of what the regulators have proposed.
04:50Uh, it's going to have to have all of the, uh, compliance built into it.
04:54So we've already talked about digital identity, uh, and on custody and all the other underlying, um,
05:00cornerstones and bedrocks that are required in order to operate at scale and have institutional adoption.
05:05Again, this is just another one of those.
05:08So I do think that we probably do get adoption of the custody rule that was proposed by the SEC
05:13probably later in 2025 when they really mandate that deal.
05:17Uh, so we do have a while, um, and again, this amendment's probably further out too.
05:22There's a lot of things that have to be passed and implemented, uh, before we get to the,
05:27the awesome stuff that a lot of us are anticipating and wanting to be able to do, um,
05:32with the XRP and other issued assets on the XRPO.
05:35So, uh, super exciting.
05:37I was glad to see, you know, it's always nice to be able to say you're right.
05:41Uh, cause you never know.
05:42A lot of this stuff is speculation.
05:44I just take my best guess a lot of the time.
05:46Uh, and I still don't have this for sure, right?
05:48This is a proposed amendment.
05:49If it doesn't make it through, there could be iterations and changes from here.
05:53Uh, but the premise that exists within this amendment, uh, and what has a lot of people excited,
05:58uh, and myself included, uh, is that you will be able to lock your assets in qualified custody,
06:05be able to see them and then delegate that representation into whatever protocol you want
06:11to, to be able to borrow against it or earn some yield.
06:14Hopefully this has been valuable for you.
06:16If it has, please like subscribe.
06:18We'll see you there in the comments, or we'll see you in the next video.
