Circle is developing a reversal mechanism to combat fraud.
Date: 2025-09-26 Author: Gabriel Deangelo Categories: BUSINESS
Circle, the issuer of the USDC stablecoin, is considering implementing a reversal mechanism. According to company president Heath Tarbert in an interview with the Financial Times, such a mechanism could be an important step in bridging the gap between the stablecoin industry and traditional finance. He explained that the idea is to create conditions under which users can recover their funds in cases of fraud or disputes.
Tarbert noted that while finality of settlements is important, it is necessary to find a balance between security and transparency. He added that developers are currently discussing the idea of partially reversing transactions on some blockchains, with the consent of all parties, if fraud is confirmed.
In parallel, Circle is working on its own Arc blockchain network. Currently, transactions on this network are final and cannot be reversed. However, the company plans to introduce an additional functional layer that would allow for refunds with mutual consent from both parties, similar to the chargeback mechanism in banking. This approach should increase trust in digital assets among traditional financial institutions.
Another goal of Circle is to ensure privacy when handling transactions. The company proposes a system where wallet addresses remain publicly accessible on the blockchain, but transfer amounts will be encrypted. This solution is designed to protect users' sensitive data while maintaining basic transparency.
"Financial institutions and their clients don't always need every transaction to be publicly available. That's why we developed a privacy mechanism that hides specific transfer amounts," Tarbert explained.
Thus, Circle aims to combine the best practices of traditional banking and decentralized technologies. The ability to refund fraud and a flexible level of transparency could make USDC and the company's other products more attractive to both individual users and large financial institutions.
The company also previously introduced the Gateway service, which integrates USDC liquidity into a multi-chain infrastructure, aiming to simplify interactions with the asset across different ecosystems.
Circle's new initiatives demonstrate the company's commitment to expanding the capabilities of stablecoins and strengthening their role in the global financial system.
