Circle Introduces New Token Standard Aimed at Reducing Crypto Thefts

Circle, the company behind USD Coin (USDC), is introducing new blockchain-based solutions aimed at preventing theft and illicit activities involving digital assets. The initiative was announced by Circle’s CEO, Jeremy Allaire, who highlighted the need for these solutions in light of the nearly $10 billion in crypto losses reported between 2021 and 2023, mainly due to irreversible transactions that have been exploited by hackers.

“The adoption of on-chain payment methods such as stablecoins for commerce has been limited by the lack of reversibility in transactions, a key feature of modern payment systems and critical in a world that’s rife with online fraud or even simply customers receiving the wrong or deficient products or services,” said Jeremy Allaire.

To address these issues, Circle has released the “Recoverable Token Standard,” developed in collaboration with Stanford University. This new protocol is designed to allow for the reversal of transactions, thereby enabling the recovery of ERC-20 tokens, commonly used for cryptocurrencies on the Ethereum network.

Circle has made the protocol for this new standard available for public review on GitHub, encouraging participation and feedback from the wider crypto community. Additionally, they have published a whitepaper detailing the framework of this innovative blockchain product.

Alongside the new token standard, Circle introduced R-Pools, an insurance and liquidity model specifically designed for Recoverable Tokens. These pools act as a safeguard, offering token holders the ability to redeem their assets through a crypto insurance fund.

“We have long held that the open and programmable nature of digital currency money on blockchain networks would spawn solutions to these problems, but ones that can be adopted for the vast array of on-chain financial and commercial use cases, not just retail payments,” Allaire explained.

The launch of these solutions comes amid allegations against Circle from Senators Elizabeth Warren and Sherrod Brown, who accused the stablecoin operator of engaging in improper banking relationships and facilitating illicit activities, claims which Circle has strongly denied.

In parallel, Circle is reportedly working with major traditional banks in Japan on stablecoin initiatives and is planning for an initial public offering (IPO) in 2024.