Stablecoin Groups Circle, Paxos Test New Tech to Verify Crypto Payments

(Bloomberg) -- Stablecoin heavyweights Circle Internet Group Inc. and Paxos Trust Co. have piloted a new way to prevent copycats and help companies verify their digital asset holdings

The firms partnered with Bluprynt, a fintech startup founded by Georgetown Law School professor Chris Brummer, using cryptography and blockchain technology to provide issuer verification when stablecoins are released by a company. The pilot provided a way to trace back a token to the verified issuer, using Bluprynt’s technology, according to a statement.

Bluprynt’s technology gives “provenance upfront, reducing complexity, and providing regulators and investors with the transparency they need,” Brummer said. He noted that could help curb losses due to counterfeit tokens and impersonation attacks.

It’s another sign that parts of the digital asset industry are maturing as they seek to meet new regulatory requirements being established in jurisdictions across the globe. Stablecoins are digital assets pegged to non-volatile assets, such as US dollars, and can be used as a cash equivalent for payments. The technology, Brummer said, could benefit auditors, financial crime-fighters, and investors.

Blockchain analysis firms like Chainalysis Inc. have noted that stablecoins face distinct security risks depending on how they are issued and managed. The firm said in a June report that impersonation and fake stablecoins are a common risk.

Circle’s USDC is the second-largest stablecoin by market value, and Paxos issues and operates the blockchain infrastructure behind PayPal Inc.’s stablecoin, PYUSD. The number of firms offering stablecoins is expected to grow with the recently-enacted GENIUS Act, which provides a framework for dollar-backed stablecoins.

More stories like this are available on bloomberg.com

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

Download the Mint app and read premium stories