Circle, one of the world’s largest stablecoin issuers, is exploring ways to reverse some transactions in cases of fraud or disputes. The idea would mark a notable shift for the crypto sector, which has long prized the “immutability” of blockchain records.
According to the Financial Times, Circle’s President, Heath Tarbert, explained that the idea is to balance the speed and finality of digital payments with protections common in traditional finance, such as refunds.
“We are thinking through…whether or not there’s the possibility of reversibility of transactions, right, but at the same time, we want settlement finality,” he said.
Circle’s Arc blockchain
The proposal comes as Circle tests a new blockchain called Arc, which was unveiled in August. It is designed for banks and financial institutions to use stablecoins in transactions, including foreign exchange deals. While Arc would not allow payments to be directly unwound, it could support counter-payments by agreement between parties, similar to credit card refunds.
Tarbert, a former head of the U.S. Commodity Futures Trading Commission, said developers are debating whether blockchains could allow limited reversibility in special cases, such as fraud, if all parties involved agree.
He added, “People say blockchain technology, stablecoins, smart contracts, are superior in technology to the current system. But there are some benefits of the current system that aren’t necessarily currently present.”
Circle is also working on a privacy feature that would encrypt transaction amounts while keeping wallet addresses visible, allowing institutions to shield sensitive financial details.
Stablecoin market
Stablecoins are increasingly seen as a bridge between crypto and traditional finance. Treasury Secretary Scott Bessent sees that the US stablecoin market may reach $2 trillion in 2028 due to regulatory backing and increased adoption
Tarbert stressed that fresh inflows into stablecoins would likely be driven by a number of different sources, including other investments or newly made wealth, rather than being solely drawn from traditional bank deposits.
With $74 billion of USDC in circulation, Circle hopes to appeal to institutional users, differentiating itself from other issuers such as Tether, which targets high-volume crypto trading.
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