Deposit Authorization

(Requires the DepositAuth amendment.)

Deposit Authorization is an optional feature of an account in the XRP Ledger. With Deposit Authorization enabled, transactions cannot send value of any kind to the account unless the sender of those transactions is the account itself. This includes transfers of XRP and issued currencies.

By default, new accounts have DepositAuth disabled.

Background

Financial services regulations and licenses may require that a business or entity must know the sender of all transactions it receives. This presents a challenge on a decentralized system like the XRP Ledger where participants are identified by pseudonyms which can be freely generated and the default behavior is for any address to be able to pay any other.

The Deposit Authorization flag introduces an option for those using the XRP Ledger to comply with such regulations without changing the fundamental nature of the decentralized ledger. With Deposit Authorization enabled, an account can only receive funds it explicitly approves by sending a transaction. The owner of an account using Deposit Authorization can perform the due diligence necessary to identify the sender of any funds before sending the transaction that causes the account to receive the money.

Deposit Authorization is intended to be used with Checks, Escrow, and Payment Channels. In this "two-step" model, first the source sends a transaction to authorize sending funds, then the destination sends a transaction to authorize receiving those funds. Deposit Authorization cannot be used with Payment transactions.

To get the full effect of Deposit Authorization, Ripple recommends also doing the following:

  • Always maintain an XRP balance higher than the minimum reserve requirement.
  • Keep the DefaultRipple flag in its default (disabled) state. Do not enable rippling on any trust lines. When sending TrustSet transactions, always use the tfSetNoRipple flag.
  • Do not place Offers. It is impossible to know in advance which matching offers will be consumed to execute such a trade.

Precise Semantics

An account with Deposit Authorization enabled:x

  • Cannot be the destination of Payment transactions, with one exception:
    • If the account's XRP balance is equal to or below the minimum account reserve requirement, it can be the destination of an XRP Payment whose Amount is equal or less than the minimum account reserve (currently 20 XRP). This is to prevent an account from becoming "stuck" by being unable to send transactions but also unable to receive XRP. The account's owner reserve does not matter for this case.
  • Can receive XRP from PaymentChannelClaim transactions only if the sender of the PaymentChannelClaim transaction is the destination of the payment channel.
  • Can receive XRP from EscrowFinish transactions only if the sender of the EscrowFinish transaction is the destination of the escrow.
  • Can receive XRP or issued currencies by sending a CheckCash transaction. (Requires the Checks amendment.)
  • Can receive XRP or issued currencies by sending OfferCreate transactions.
    • If the account sends an OfferCreate transaction that is not fully executed immediately, it can receive the remainder of the ordered XRP or issued currency later when the offer is consumed by other accounts' Payment and OfferCreate transactions.
  • If the account has created any trust lines without the NoRipple flag enabled, or has enabled the DefaultRipple flag and issued any currency, the account can receive the issued currencies of those trust lines in Payment transactions as a result of rippling. It cannot be the destination of those transactions.
  • In general, an account in the XRP Ledger cannot receive any non-XRP currencies in the XRP Ledger as long as all of the following are true. (This rule is not specific to the DepositAuth flag.)
    • The account has not created any trust lines with a nonzero limit.
    • The account has not issued currency on trust lines created by others
    • The account has not placed any offers.

The following table summarizes whether a transaction type can deposit money with DepositAuth enabled or disabled:

  DepositAuth Disabled   DepositAuth Enabled
Transaction Type Sent by DestinationSent by Others   Sent by DestinationSent by Others
AccountSet (This transaction type never sends money.)
CheckCancel (This transaction type never sends money.)
CheckCash OK No Permission   OK No Permission
CheckCreate (This transaction type never sends money.)
EscrowCancel Can return XRP from an expired escrow
EscrowCreate (This transaction type can only debit XRP, not credit it.)
EscrowFinish OK OK   OK No Permission
OfferCancel This transaction type never sends money.
OfferCreate OK Only if account previously created a matching offer   OK Only if account previously created a matching offer
Payment
(If account has more than the minimum XRP reserve, enables NoRipple on all trust lines, and places no offers)
Cross-currency only OK   No Permission No Permission
Payment
(If account XRP balance is below the minimum XRP reserve)
Cross-currency only OK   No Permission XRP payments up to the minimum reserve
Payment
(If account has any trust lines with NoRipple disabled)
Cross-currency only OK   No Permission Balance changes from rippling
Payment
(If account has placed offers)
Cross-currency only OK   No Permission Balance changes from executing offers
PaymentChannelClaim OK OK   OK No Permission
PaymentChannelCreate (This transaction type can only debit XRP, not credit it.)
PaymentChannelFund Can return XRP when closing a channel created by self
SetRegularKey (This transaction type never sends money.)
SignerListSet (This transaction type never sends money.)
TrustSet (This transaction type never sends money.)

Enabling or Disabling Deposit Authorization

An account can enable deposit authorization by sending an AccountSet transaction with the SetFlag field set to the asfDepositAuth value (9). The account can disable deposit authorization by sending an AccountSet transaction with the ClearFlag field set to the asfDepositAuth value (9). For more information on AccountSet flags, see AccountSet flags.

Checking Whether an Account Has DepositAuth Enabled

To see whether an account has Deposit Authorization enabled, use the account_info method to look up the account. Compare the value of the Flags field (in the result.account_data object) with the bitwise flags defined for an AccountRoot ledger object.

If the result of the Flags value bitwise-AND the lsfDepositAuth flag value (0x01000000) is nonzero, then the account has DepositAuth enabled. If the result is zero, then the account has DepositAuth disabled.

See Also

  • The Authorized Trust Lines feature (RequireAuth flag) limits which counterparties can hold non-XRP currencies issued by an account.
  • The DisallowXRP flag indicates that an account should not receive XRP. This is a softer protection than Deposit Authorization, and is not enforced by the XRP Ledger. (Client applications should honor this flag or at least warn about it.)
  • The RequireDest flag indicates that an account can only receive currency amounts if the sending transaction specifies a Destination Tag. This protects users from forgetting to indicate the purpose of a payment, but does not protect recipients from unknown senders, who can make up arbitrary destination tags.
  • Partial Payments provide a way for accounts to return unwanted payments while subtracting transfer fees and exchange rates from the amount delivered instead of adding them to the amount sent.