Circle has launched USDCx on the Aleo blockchain, a privacy-enabled version of USDC issued via Circle’s xReserve model. USDCx is fully collateralized by USDC within xReserve and can interoperate with Ethereum and other major L1/L2 networks without relying on third-party bridges. Aleo’s privacy architecture enables verification of sender, receiver, and transfer amount on-chain without exposing these details publicly.
Unlike the direct USDC issued on public blockchains, USDCx operates inside Aleo’s zero-knowledge framework, preserving privacy while maintaining regulator-friendly collateral. The collaboration was first disclosed last December and aims to expand privacy solutions for banks and enterprise clients.
Privacy-focused blockchains are accelerating efforts to improve USD-pegged stablecoins, with regulatory considerations shaping demand. Analysts point to FATF travel rule enhancements driving interest in privacy-focused assets as they seek a balance between regulatory compliance and data privacy. The integration of privacy technology with stablecoins suggests a path where transparent reserves and zero-knowledge proofs could reduce regulatory burdens while protecting user data.
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