Coinbase Wrapped XRP, known as "cbXRP," is a token fully backed at a 1:1 ratio by native Ripple (XRP) held in Coinbase’s secure custody systems, which include cold storage. This ensures that every unit of cbXRP in circulation corresponds to an equal amount of XRP kept by Coinbase. As a wrapped asset, cbXRP functions as a transferable token that can be exchanged for the original asset. Users on Coinbase can redeem their cbXRP for the underlying XRP by depositing the tokens into their accounts. The token is designed for seamless integration with DeFi applications, allowing customers to access decentralized finance opportunities and utilize additional financial features.

cbXRP eliminates a major barrier by enabling customers to utilize their existing XRP holdings in new onchain ways. Designed for seamless integration with DeFi applications, it allows users to engage in novel use cases such as supplying XRP as liquidity to DeFi protocols, leveraging it as collateral for borrowing other crypto assets, or using it for payments. Wrapped assets like cbXRP are an established concept in the crypto industry, helping to increase the volume of liquid assets onchain and support a broader financial ecosystem.

cbXRP maintains a 1:1 fungibility with a dedicated reserve of XRP held by Coinbase. The minting (sending) and burning (redeeming) mechanisms ensure transparency and trust, offering a smooth user experience. When a user requests to withdraw cbXRP, Coinbase retains the equivalent amount of XRP in custody to back the newly minted cbXRP.

• Minting: If a user initiates a withdrawal of XRP from their Coinbase account to the Base network, an equal amount of cbXRP is minted on that network and transferred to the user’s designated wallet address.
• Burning: Upon depositing cbXRP to a specific Coinbase address, the tokens are burned, and the corresponding XRP is released from Coinbase’s reserve and credited to the user’s Ripple account.

The total supply of cbXRP is visible in the token smart contract under the totalSupply field.

Minting and burning cbXRP rely on a suite of secure, audited Ethereum smart contracts. These contracts manage the creation and destruction of cbXRP to ensure the total supply always aligns with the backing XRP reserves. cbXRP utilizes the foundational components of the Coinbase wrapped token contract, which was previously deployed for Coinbase Wrapped Staked ETH (cbETH). The open-source repository for Coinbase’s wrapped token smart contracts, covering both cbXRP and cbETH, is available on Github.

Coinbase manages several key roles within the wrapping contract, protected by its key management systems. Executing these roles requires approval from multiple personnel across different departments, including security, engineering, and finance.

• Admin: authorized to upgrade the wrapped token implementation contract
• Owner: authorized to assign all roles other than Admin
• Blacklister: authorized to blacklist addresses from transferring, minting, and burning
• MasterMinter: authorized to assign minters and set their limits
• Minter: authorized to mint and burn tokens
• Pauser: authorized to pause transfers, mints, and burns for the contract

To protect the XRP backing cbXRP, Coinbase uses advanced wallets, conducts regular audits, and maintains comprehensive monitoring systems. Furthermore, all smart contracts involved in minting and redemption undergo rigorous testing and auditing by independent security experts.

Coinbase commissioned OpenZeppelin to audit the cbETH smart contract, which was also utilized for cbXRP. No material changes were made to the contract code during the deployment of cbXRP.

The XRP reserves backing cbXRP are held at Coinbase on a 1:1 basis, and redemption rights belong to cbXRP holders. For details on Coinbase’s custodial services and terms applicable to cbXRP holders, please consult the relevant Coinbase User Agreement.

Coinbase employs both hot and cold wallets in its custodial infrastructure. Private key materials for cold wallets are stored and secured in facilities located in the United States and Europe. As part of its risk mitigation strategy, Coinbase does not store wallet private keys in plaintext anywhere, and decrypting a private key for either hot or cold wallets requires cryptographic consensus from multiple human operators. No single person controls Coinbase’s wallet private keys. The company conducts internal audits of its private key management processes and reconciles Coinbase wallet data with third-party blockchain records. Coinbase does not employ sub-custodians for storing digital assets.

Coinbase is dedicated to operating within the legal frameworks of its jurisdictions. The launch of cbXRP adheres to all applicable regulations, including Anti-Money Laundering (AML) and Know Your Customer (KYC) standards. Coinbase has secured various licenses for operations in the United States and globally, such as multi-state money transmission licenses and crypto asset trading and custody licenses in New York, Germany, Singapore, Canada, Bermuda, and other regions. Additionally, Coinbase is registered as a Virtual Asset Service Provider in several countries.