Circle, the issuer of the stablecoin USDC, is exploring ways to reverse transactions, according to a report by FT, citing the company’s president, Heath Tarbert.
This feature is deemed necessary to combat fraud and align “stablecoins” more closely with traditional finance.
Tarbert stated that the company aims to combine instant and irrevocable transfers with the ability to reverse funds. This creates “internal tension,” as it contradicts the blockchain’s principle of immutability.
“The current system has advantages that the crypto industry lacks,” said Tarbert.
The idea has faced criticism. Such measures conflict with a key principle of cryptocurrencies, and some industry participants consider them “heresy.” One venture investor described such a blockchain as “offensive.”
The reversal mechanism might be implemented in the new Arc network, which Circle is developing for financial institutions. There will be no direct transaction reversal. Instead, a second layer will be introduced where parties can agree on counter-payments, similar to credit card chargebacks.
The Arc network also plans to add a privacy layer. This will allow transaction amounts to be hidden to protect financial information, leaving only wallet addresses visible.
In August, it was revealed that Circle is integrating its network with the institutional platform Fireblocks.
Later, the Japanese financial conglomerate SBI Holdings announced new partnerships with Circle, Ripple Labs, and the Web3 company Startale.