Circle, the issuer of USD Coin (USDC), has launched a new blockchain-based compliance platform. The move aims to strengthen its position in the stablecoin market, to jab its rival Tether (issuer of USDT) and to claim leading role inthe world of tokenized real world assets (RWA).
The new platform is called Compliance Engine. It offers tools for transaction screening and monitoring.
CEO Jeremy Allaire announced the launch on September 24. He said it will help companies "build onchain while meeting rigorous demands for compliance".
The platform includes services for Know Your Customer (KYC) requirements. It also addresses the United States' Travel Rule. Allaire highlighted Circle's experience in this area. "We've built up tremendous capabilities over the past decade," he said.
Compliance Engine adds to Circle's existing Web3 developer tools. These include a programmable wallet and smart contract platform: all tools center around USDC, Circle's core stablecoin product.
Initially, the platform will operate on several blockchain networks. These include Avalanche, Ethereum, Polygon PoS, and Solana.
The launch is Circle's latest effort to boost USDC adoption.
USDC is competing for market dominance against Tether's USDT. USDC's market cap is about $36 billion, which is significantly less than USDT's $119 billion. FDUSD from Hong Kong is gaining strength, too. PayPal's stablecoin, PYUSD, has added to the competition. Launched in 2023, it reached a $1 billion market cap in August.
Compliance is crucial for Circle. As of now, USDC is already more attractive to many users than USDT because of how 'clean' and compliant Circle is compared to Tether.
But there is more to it.
The company stands to benefit from the adoption of tokenized real-world assets (RWAs), and these include tokenized investment funds.
RWAs could become a multi-trillion dollar market in the near future. Popular tokenized RWAs include those representing claims on off-chain money market funds, for instance, funds that pay low-risk yield on US dollars. They often accept payments in USDC.
Two major players in this space are BlackRock and Franklin Templeton. Their funds, BUIDL and FOBXX, have assets under management of $520 million and $430 million respectively. The market of financial RWAs is potentially vast, and Circle is making a bold claim to be a significant player there.