Circle (CRCL.US) and Blockchain Infrastructure Provider Paxos Test New Technology to Validate Crypto Payments

The Zhitong Finance App learned that stablecoin issuer Circle (CRCL.US) and blockchain infrastructure provider Paxos Trust Co. A new method has been piloted to prevent counterfeiting and help businesses verify their digital asset holdings. The two companies have partnered with fintech startup Bluprynt. The pilot project uses cryptography and blockchain technology to provide issuer verification when companies issue stablecoins. According to a statement, the pilot provided a way for the token to be traced back to a verified issuer based on Bluprynt's technical implementation.

Bluprynt founder Chris Brummer said Bluprynt's technology can “provide proof of origin on the front end, reduce complexity, and provide regulators and investors with the transparency they need.” He noted that this helps reduce losses due to counterfeit tokens and counterfeiting attacks.

This is another sign that parts of the digital asset industry are maturing as they strive to meet new regulatory requirements set by various jurisdictions around the world. A stablecoin is a digital asset anchored to a non-volatile asset (such as the US dollar) and can be used as a cash equivalent in payments. Chris Brummer said the technology could benefit auditors, financial crime investigators, and investors.

Blockchain analysis company Chainalysis Inc. pointed out that the security risks faced by stablecoins vary depending on how they are issued and managed. The company said in a June report that impersonation and counterfeiting stablecoins is a common risk.

Circle's USDC is the second-largest stablecoin by market capitalization, while Paxos issues and operates the blockchain infrastructure supporting the PayPal (PYPL.US) stablecoin PYUSD. As the recently passed GENIUS Act provides a framework for dollar-backed stablecoins, it is expected that more companies will enter the stablecoin issuance sector.