Everything You Need to Know About Permissioned DEX on the XRPL.

Today marks a defining moment for the XRP Ledger. The Permissioned DEX amendment (XLS-81) has officially gone live, activating on February 18, 2026. With it, the XRPL now hosts credential-gated trading environments directly inside its native decentralized exchange, a capability that no other Layer 1 blockchain offers at the protocol level.

This isn't just another feature release. It's the final piece of a three-part institutional infrastructure stack that has been rolling out since September 2025, and it fundamentally changes what's possible for regulated financial institutions on a public blockchain.

The XRPL has operated one of the world's oldest decentralized exchanges since 2012. Traditionally, any offer placed on the DEX can be matched by anyone, that's the nature of an open, permissionless order book.

The Permissioned DEX changes that- It allows domain owners to create controlled trading environments within the XRPL's native DEX where only participants holding verified credentials can place and accept offers. Trades within a permissioned DEX can only execute against other trades in the same domain. Each domain maintains its own separate order books for any number of currency pairs.

Critically, the open DEX is completely unaffected. It continues to function exactly as it has for over a decade. The Permissioned DEX builds alongside it, giving institutions and developers an additional layer of compliance-gated trading without altering the existing infrastructure.

The Permissioned DEX doesn't exist in isolation, It's the culmination of three interdependent amendments that Ripple's Senior Director of Engineering, Antonio Kaplan, has compared to the mechanics of international travel.

Credentials (XLS-70) - the digital passport. Activated in September 2025, Credentials allow trusted authorities to issue verifiable proofs of identity or compliance status on-ledger. These are tamper-evident and can be verified by third parties without directly involving the issuer. Importantly, no sensitive personal data is stored on-chain,  only proof that a credential is valid.

Permissioned Domains (XLS-80) - the visa process. Activated on February 4, 2026, with over 91% validator approval, Permissioned Domains allow institutions to define which credentials participants must hold before accessing specific environments. A domain owner sets the rules; any account holding at least one matching credential gains access.

Permissioned DEX (XLS-81) - the transportation network. Activated today, February 18, 2026, the Permissioned DEX utilizes these domains to create restricted order books for both permissionless and permissioned tokens. It integrates permissioning directly into the DEX protocol, meaning there are no custom smart contracts to deploy.
All three amendments work together. Without Credentials, there's no way to verify participants. Without Permissioned Domains, there's no way to define access rules. Without the Permissioned DEX, there's no regulated venue for those verified participants to trade.

The amendment introduces a three-tiered offer system that governs how trades interact across the open and permissioned environments.

Open Offers function exactly as XRPL DEX offers always have. They can be matched by other open offers, hybrid offers, or Automated Market Makers (AMMs). Nothing changes for the existing open DEX.

Permissioned Offers specify a DomainID and are placed into a separate order book for that domain and currency pair. They can only execute by matching other permissioned offers within the same domain. Both the maker and taker must hold valid credentials accepted by the domain. If a credential expires or the domain is deleted, the offer becomes invalid and is removed from the book, similar to how unfunded offers are handled.

Hybrid Offers are where the design gets interesting. A hybrid offer first attempts to consume liquidity from its specified permissioned DEX, then falls back to the open DEX for any remaining amount. This is the mechanism that prevents liquidity fragmentation, a problem that has plagued previous attempts at institutional DeFi, where capital gets locked inside isolated pools with weak pricing and thin order books.

Cross-currency payments can also specify a DomainID, restricting them to consume liquidity only from the corresponding permissioned order books. This is particularly relevant for regulated products that are legally required to trade only with compliant counterparties.

Understanding the limitations is as important as understanding the capabilities.

Permissioned DEXes are incompatible with AMMs. Permissioned offers and permissioned payments cannot be filled by AMMs, and access to AMMs cannot be restricted by a permissioned domain. While open DEX trades can sometimes consume a hybrid offer and use an AMM in the same transaction, any transaction that specifies a domain cannot use AMMs at all. AMM support within permissioned environments could be added in a future amendment, but it is not part of XLS-81.

A single transaction cannot trade across multiple permissioned DEXes or aggregate liquidity from different permissioned domains. Hybrid offers can bridge one permissioned DEX and the open DEX, but not two separate permissioned DEXes.

The security and fairness of any permissioned DEX ultimately depend on the domain owner and the credential issuers. The protocol enforces the rules, but the rules themselves are only as good as the entities defining them.

The fundamental barrier to institutional adoption of decentralized exchanges has always been compliance. Banks, payment providers, broker-dealers, and regulated fintechs cannot transact in environments where they have no visibility into who their counterparties are. Sanctions rules make anonymous trading legally untenable. This isn't a philosophical objection, it's a regulatory requirement.

Previous attempts to solve this problem typically involved building private blockchains or isolated permissioned networks. The result was predictable: fragmented liquidity, poor pricing, high infrastructure costs, and none of the benefits that make public blockchains attractive in the first place.

The XRPL's approach is fundamentally different. As Kaplan has explained, XLS-81 is the first system to combine permissioned and permissionless markets at the protocol level. Regulated order books are built directly into the existing DEX infrastructure. Both permissioned and open markets operate on the same ledger, which means traders, particularly market makers, can move between them. Liquidity stays consolidated rather than scattered across disconnected platforms.

Ripple has over 300 institutional partners, and the Permissioned DEX is the missing piece that allows those partners to operate directly on-chain rather than through off-chain abstractions.

The use cases that the Permissioned DEX unlocks are concentrated around payments and settlement, the areas where XRPL already has established traction.

On-chain FX and Settlement. Institutions can execute foreign exchange conversions through permissioned order books with verified counterparties, achieving instant local payout. This eliminates the need for pre-funded nostro and vostro accounts, a system that currently parks an estimated $27 trillion in idle liquidity across the global correspondent banking network.

Stablecoin and Fiat FX Swaps. Fintechs can use on-chain FX to move liquidity globally across corridors, converting USD to RLUSD, sending it across the ledger, and converting to local currency via a permissioned DEX tied to a specific regulatory jurisdiction.

Contractor and Payroll Payouts. Payment service providers can convert stablecoins into local currencies for cross-border payouts, using the permissioned DEX as an alternative settlement rail with built-in compliance controls.

Cross-border B2B Payments. Businesses using stablecoins for B2B payments, treasury transfers, and trade settlements can operate within credential-gated environments that satisfy their regulatory obligations.

Corporate Treasury Operations. Corporates converting between fiat, crypto, and stablecoins across entities and regions can manage treasury flows on-ledger with jurisdiction-specific controls.

Ripple has stated its intention to route the conversion step of cross-border payments, B2B transfers, and RLUSD-funded corridors through permissioned order books, with only verified liquidity providers participating.

The Permissioned DEX doesn't operate in a vacuum. It's part of a rapidly expanding set of institutional DeFi primitives that the XRPL has been activating throughout early 2026.

Token Escrow (XLS-85), activated on February 12, extends the XRPL's native escrow system beyond XRP to all trustline-based tokens and Multi-Purpose Tokens, including stablecoins like RLUSD and tokenized real-world assets. Combined with the Permissioned DEX, this creates a complete workflow: lock assets under specific conditions via escrow, then trade them within controlled environments via permissioned order books.

Lending Protocol (XLS-66), expected with XRPL version 3.0.0 later in 2026, will introduce pooled lending and underwritten credit directly at the ledger level. When combined with Permissioned Domains, this could enable compliant lending environments where market makers borrow XRP or RLUSD for inventory and arbitrage, payment service providers borrow stablecoins for merchant payouts, and fintech lenders access short-duration working capital.

Single Asset Vaults (XLS-65) will create mechanisms for pooling assets from multiple depositors, potentially enabling compliant yield-generating products and institutional liquidity pools when paired with domain-level access controls.

The pattern is consistent: each new primitive leverages Permissioned Domains to add compliance controls, and each one compounds the utility of the others.

The most critical risk to monitor is liquidity fragmentation. The open DEX's 24-hour trading volume has contracted significantly from peaks above $11 billion to approximately $2.39 billion, a decline driven by broader market dynamics rather than the permissioned infrastructure itself.

The key question is whether hybrid offers will effectively bridge permissioned and open liquidity or whether capital will bifurcate into disconnected pools. If hybrid bridging works as designed, and Devnet testing by XRPL Commons confirmed that it does, the permissioned and open DEX should function as complementary liquidity sources rather than competitors.

The upside scenario sees regulated liquidity islands scale rapidly, with stablecoin issuers, broker-dealers, and RWA platforms using domains to operate compliant venues while hybrid offers keep spreads competitive. The downside scenario involves fragmentation and institutional indifference, where the infrastructure exists but remains lightly used without guaranteed institutional flow.

The critical metric to watch is whether new institutional volume enters the ledger, not just whether existing volume migrates between open and permissioned books.

The activation of the Permissioned DEX represents the XRPL's clearest statement of strategic direction. The ledger is building infrastructure for institutions first, not at the expense of its open, permissionless nature, but alongside it.

Unlike private chains that sacrifice decentralization and deep liquidity, or fully public chains that cannot meet compliance requirements, the XRPL has charted a middle path: public settlement rails with optional compliance gates. Every transaction still settles on the same decentralized, public ledger. The permissioned layer simply controls who can access specific order books within that shared infrastructure.

The XRPL DEX has been battle-tested and operating continuously since 2012. There are no custom smart contracts to deploy, no third-party protocols to trust, no fragmented liquidity across separate platforms. The Permissioned DEX is protocol-native, free to use, and ready for builders and institutions to start building on today.

Combined with Ripple's expanding regulatory footprint, including EMI license approvals in the EU and the resolution of its prolonged SEC litigation, the infrastructure is now in place for significant institutional capital flows to move through the XRP Ledger.

The Permissioned DEX is live. The building blocks are activated. What happens next depends on adoption.

Node operators and validators should ensure they're running the latest version of rippled to avoid being amendment-blocked. Developers can begin testing permissioned DEX functionality immediately, with full end-to-end testing tools available through XRPL Commons.

For the XRPL ecosystem, today marks the transition from infrastructure buildout to institutional onboarding. The rails are laid. Now the question is who uses them, and how quickly.