Citrea unveils U.S. Treasury-backed stablecoin for its Bitcoin ecosystem

Citrea, a layer-2 blockchain for Bitcoin, introduced a U.S. dollar-pegged stablecoin designed to serve as a liquidity standard on its ecosystem. Citrea uses zero-knowledge proofs, a cryptographic method that lets networks verify transactions without revealing all underlying data, to settle activity back to Bitcoin.

The Citrea USD (ctUSD) token is issued by Moonpay, a developer of financial payment infrastructure for crypto, which announced a stablecoin launchpad late last year, Citrea said in a blog past. The token, backed 1:1 by short-term U.S. Treasury bills and cash, is its first.

Stablecoin liquidity remains a core bottleneck for Bitcoin-focused decentralized finance (DeFi), where capital often gets split across bridged versions of dollar tokens. That fragmentation can increase slippage for traders, reduce lending depth and amplify systemic risk when a single bridge or collateral asset fails. Citrea says it is trying to prevent that issue by issuing ctUSD natively.

“Fragmentation is a symptom of bridging, and we solve it by design: ctUSD is natively issued on Citrea,” Orkun Mahir Kilic, co-founder and CEO of Chainway Labs, the company building Citrea said in an interview. “There are no bridged versions to fracture liquidity; there is only one canonical asset.”

The token, which will be accessible in 49 U.S. states excluding New York and more than 160 countries outside the European Economic Area and Canada, is also an early test of MoonPay’s push into stablecoin issuance.

“This positions Citrea not just as a participant, but as the launchpad for MoonPay’s new standard of regulated, application-specific digital dollars,” he said.

The company is also leaning into a policy argument. The stablecoin debate is shifting from prohibition to regulation, especially as institutions look for compliant ways to move dollars onchain, Kilic said.

“The narrative in Washington is shifting from ‘ban it’ to ‘regulate it,’ and institutions entering the crypto ecosystem are ultimately searching for assets that eliminate counterparty ambiguity,” he said. “If we want to bring global capital onchain for the Bitcoin ecosystem, we must offer regulated infrastructure for fiat alongside trust-minimized BTC through Citrea.”

Kilic said MoonPay’s compliance framework includes the ability to freeze or blacklist addresses “when required by law or to prevent illicit activity,” aligning with consumer protection and anti-money laundering standards that stablecoin issuers are increasingly expected to meet.

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