Circle Develops Privacy-Focused Stablecoin with USDCx Project

Circle, the issuer of the USDC stablecoin, is creating a privacy-enhanced version of its dollar-pegged token. This new initiative, called USDCx, aims to increase institutional adoption by offering more privacy compared to traditional public blockchains.

Key Takeaways

Circle is developing USDCx, a privacy-focused stablecoin, in partnership with Aleo.
USDCx aims to provide “banking-level privacy” for institutional users, unlike standard stablecoins that reveal transaction details.
The project responds to concerns from financial institutions about publicly visible transactions.
Other companies, like Taurus, are also exploring private options for stablecoin transactions.
The development of USDCx aligns with increasing interest in stablecoins, spurred by the newly enacted US GENIUS Act regulation.

The USDCx stablecoin is specifically designed for banking and enterprise clients and leverages technology from Aleo, a company specializing in privacy-focused blockchain solutions, as noted by Aleo co-founder Howard Wu. In contrast to most existing stablecoins, whose wallet addresses and transaction details are fully visible on public blockchains, USDCx aims to ensure a higher level of privacy. However, Circle will still be able to generate compliance records for law enforcement or regulatory inquiries involving specific transactions.

This new project aims to tackle a significant barrier for major financial institutions, which have shown caution in utilizing blockchain payment methods due to the visibility of their transaction flows.

Source: Circle

Aleo has long maintained that privacy is vital for the next wave of stablecoin adoption. The company highlighted in a May post that although transparency is often touted as a primary benefit of blockchain technologies, it can become problematic when handling sensitive payment information.

Moreover, Aleo is not the only player advocating for privacy in the realm of stablecoins. As reported by Cointelegraph, Taurus, a digital asset infrastructure provider, has developed a private smart-contract system aimed at facilitating anonymous transactions. This advancement is intended to enhance the use of stablecoins for internal company payments and employee salaries.

Circle moves toward privacy-focused stablecoin with USDCx project

The Rise of Stablecoins in Corporate America

Circle’s venture into privacy-oriented stablecoins coincides with growing institutional interest, partly driven by the recently enacted US GENIUS Act—a new regulatory framework governing US dollar-pegged tokens.

The burgeoning corporate competitive landscape in stablecoins is underscored by partnerships among industry giants. For instance, Citigroup is collaborating with Coinbase to test stablecoin-based payment solutions for its clients, while other leading firms such as JPMorgan and Bank of America are reportedly experimenting with similar technologies.

Additionally, global remittance provider Western Union is building a digital asset settlement system using the Solana network, aiming to introduce a US Dollar Payment Token as part of its operational upgrades. In parallel, Visa is expanding its stablecoin offerings to stay competitive in this rapidly evolving market.

Average stablecoin supply by issuer. Source: Visa Onchain Analytics

The US dollar serves as the foundation for the majority of global stablecoin activities. Together, USDC and Tether’s USDt account for approximately 85% of the market share, with other dollar-backed tokens, including synthetic dollars and PayPal USD, also ranking among the largest in the sector.

As interest in stablecoins continues to grow, the industry appears poised for significant transformation, emphasizing the importance of privacy and innovation.

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