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Circle proposes recoverable token standard to address crypto theft

source-logo  crypto.news 04 December 2023 17:25, UTC

The stablecoin company said irreversible crypto transactions have left millions with heavy losses and necessitated a new digital asset with greater flexibility.

Jeremy Allaire, CEO of USD Coin (USDC) issuer Circle, announced the launch of two new on-chain solutions focused on combating theft and illicit operations targeting assets on blockchains.

The Circle boss cited reports of nearly $10 billion in crypto losses between 2021 and 2023, primarily due to hackers and exploiters launching attacks on decentralized protocols. Allaire added that these assets prove harder to repossess thanks to the irreversible design of crypto transactions.

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.

Jeremy Allaire, Circle CEO
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USDC’s creator published the “Recoverable Token Standard” based on earlier research with Stanford University. Allaire added that the protocol was built to complement the base layer of money transmission and enable transfers to be revoked, making it possible to recover ERC-20 tokens.

ERC-20 is the preferred standard for cryptocurrencies issued on Ethereum.

The idea is open-sourc and Circle’s chief welcomed crypto participants to review its code on GitHub. Circle also released a Whitepaper, a standard when introducing a new blockchain product.

Allaire’s firm additionally provided details for R-Pools, an insurance and liquidity model for Recoverable Tokens. The pools serve as a cushion for the new token model, and allow a Recoverable token holder 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.

Jeremy Allaire, Circle CEO

The development arrived on the heels of allegations from Senators Elizabeth Warren and Sherrod Brown, accusing Allaire’s stablecoin operator of improper banking relationships and financing illicit activities, which Circle categorically denied.

Circle is reportedly collaborating with traditional banking mammoths on stablecoin solutions in Japan and is eying an IPO in 2024.

Read more: Circle eyes IPO in 2024 after failure in 2021: Bloomberg