Circle and Chainlink Collaborate for Cross-Chain Stablecoin Transfers Amid Regulatory Developments

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Jeremy Allaire, CEO of Circle, has expressed optimism about the United States passing a significant law pertaining to stablecoins in 2023. This optimism was shared during an interview at the World Economic Forum’s annual meeting in Davos, Switzerland, on January 15. Allaire emphasized the increasing global trend of digital dollars and the need for the U.S. to take the lead in regulating these currencies to ensure proper consumer protections.

Circle, the company behind the well-known stablecoin USD Coin (USDC), has observed encouraging developments from U.S. lawmakers, courts, and regulators in recent times. Dante Disparte, Circle’s Chief Strategy Officer and Global Head of Public Policy, echoed this sentiment, noting bipartisan support for stablecoin policy early in the year.

Key legislative proposals under consideration in the U.S. include the Clarity for Payment Stablecoins Act, introduced by Representative Patrick McHenry, which seeks to establish a regulatory framework for stablecoin issuers akin to that of traditional financial entities. Another significant proposal is the Stablecoin Transparency Act, introduced by Senator Bill Hagerty on March 31, 2022.

In its push for stablecoin legislation, Circle has been actively lobbying, engaging the services of strategic consulting firm Invariant since late 2021. Records from ProPublica indicate that the company has spent approximately $760,000 on lobbying efforts.

Allaire also expressed hope for broader regulatory progress following the approval and launch of spot Bitcoin exchange-traded funds. He anticipates that the year 2024, marked by such developments, will further expand the scope of the digital asset market.

However, concerns remain regarding the use of stablecoins in illicit activities, as pointed out by Disparte. He highlighted instances of digital assets being used for funding terrorism in the Middle East and for drug trafficking within the United States. Addressing these concerns is crucial for the country’s and economy’s interests.

In related developments, Chainlink has collaborated with Circle to facilitate cross-chain stablecoin transfers. This integration enables developers to create applications involving the transfer of USDC across multiple blockchains using Chainlink’s Cross-Chain Interoperability Protocol (CCIP). Sergey Nazarov, co-founder of Chainlink, expressed enthusiasm for the adoption of stablecoins in various cross-chain applications. The integration currently supports Ethereum, Arbitrum, Optimism, Avalanche, and Base mainnets, with plans to expand to other networks soon.

Chainlink’s CCIP is a software tool allowing inter-blockchain communication and token transfers, while Circle’s Cross-Chain Transfer Protocol (CCTP) enables the transfer of USDC between chains through a process of burning and minting.

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