What Happened?
Stablecoin issuer Circle plans to launch the “Circle Payments Network,” enabling financial institutions to use stablecoins for cross-border payment settlements. This payment network will directly connect financial institutions and technology companies, eliminating the need for traditional intermediary banks to process cross-border payments.
The Circle Payments Network offers flexible payment options, allowing users to choose between stablecoins or local currencies for transactions, and supports smart contract functionality for automated payment execution.
Circle will ensure that all participating institutions comply with international regulatory standards, particularly in terms of anti-money laundering and counter-terrorism financing requirements. In addition, the network collaborates with several large international banks and works alongside payment service providers and fintech companies to enhance the market application of stablecoins.
Stablecoin Issuer Circle to Launch “Payments Network”
Recently, Circle, the issuer of the USDC stablecoin, announced that it will officially launch the “Circle Payments Network” in May. The goal of this network is to enable global financial institutions to use stablecoins for real-time cross-border payment settlements. As the second-largest stablecoin issuer globally, Circle aims to expand the application of stablecoins in the traditional financial sector through this initiative.
According to a report by Bloomberg, the first stablecoins supported by the network include USDC and EURC. Additionally, Circle plans to implement a “Cross-Chain Transfer Protocol,” allowing the payment network to be compatible with any blockchain used by its member institutions. This means that regardless of the blockchain on which these stablecoins are deployed, they can operate on the same platform.
The Circle Payments Network will directly connect financial institutions and technology companies, eliminating reliance on the traditional “correspondent banking network” for cross-border payments. Traditional cross-border payment systems typically require intermediary banks to complete transactions, while Circle seeks to handle payments in a more direct and efficient manner.
How Does the Circle Payments Network Work? What Makes It Special?
Circle states that this service will allow senders to initiate payments using either traditional currency or stablecoins, while recipients can choose to receive stablecoins or convert them into local currency. This flexible payment model enables financial institutions and businesses in different countries to select the best method based on their needs. Furthermore, the Circle Payments Network supports smart contracts, allowing transactions to be executed automatically when specific conditions are met, thereby enhancing transaction automation and efficiency.
The Circle Payments Network will ensure that all participating institutions adhere to international compliance standards, particularly in areas such as anti-money laundering (AML) and counter-terrorism financing (CFT). Reportedly, the network was designed in collaboration with several large international banks, including Banco Santander, Deutsche Bank, Société Générale, and Standard Chartered Bank.
In addition to traditional financial institutions, Circle has partnered with several fintech companies, such as payment service providers Nuevi, Zepz, dLocal, and Flutterwave. These partners will assist in promoting the expansion and adoption of the Circle Payments Network.
During an interview, Circle executive Nikhil Chandhok stated that Circle’s plan is not just to promote its own stablecoin products but to foster the overall growth of the stablecoin sector and encourage the entry of more diverse stablecoins into the market.
Source: Bloomberg, PYMNTS