Circle, a USDC issuer, is exploring reversible stablecoin transactions to limit fraud without impacting settlement finality, a subject of controversy within the crypto community.
Circle, the developer of the USDC stablecoin, is considering the option of reversible transactions. This is what its president, Heath Tarbert, discussed in an interview with the Financial Times. This is aimed at managing fraud and payment disputes in a better manner.
Is Reversible Transactions the Future of Stablecoins?
Tarbert stated that an instant transfer has a trade-off with an irrevocable payment. Circle would like to have the option of reversing the transactions and retaining final settlements.
This implies that payments in special cases could be reversed without compromising the speed of the system.
As of today, it is possible to freeze balances in USDC at the request of a court. According to Dune Analytics data, authorities have frozen approximately 108.8 million in 347 wallets.
Comparatively, Tether has frozen more than 1.4 billion USDT, demonstrating that the reversible transactions can be placed within the current regulations of the centralized stablecoins.
Characteristics of a Step toward Traditional Finance?
Circle recently released Arc, a new blockchain to assist the USDC to enter mainstream usage. According to Tarbert, reversible transactions would not occur on Arc per se, but they could occur on another network layer where the participants agree.
This model resembles more antiquated systems of payments, where there are chargebacks and disputes.
Tarbert wrote that blockchain and stablecoins are technologically strong, but they do not have all the attributes of traditional finance, including conditional reversibility. The objective is to combine cryptographic ability and feasible protection.
The proposal contradicts the fundamental idea of cryptocurrency, final and immutable transactions. Nonetheless, it might assist in incorporating stablecoins into the current institutions and gain confidence among common users.
Tarbert, who has worked in the U.S. Treasury and the Commodity Futures Trading Commission, could be pragmatic in his mix of the advantages of crypto and the reality of regulation.
