The Centre Consortium is an independent, member-based consortium founded by Circle and Coinbase in 2018 with the mission to provide network governance and standards for Centre-sponsored stablecoins and the digital ecosystem. USD Coin (USDC), the world’s second largest stablecoin, is the first launched using Centre standards.
The standards we adopt for USDC help our members to ensure that USDC is used by the public with confidence in a secure and transparent manner. We believe our standards are the pillars supporting the reliable standing of USDC and its popular utility in the digital asset ecosystem.
Centre is dismayed by the Russian invasion of Ukraine and supports the role sanctions are playing in countering this unlawful violence. There is news coverage about how crypto may be used to evade economic sanctions, and we wish to outline how Centre’s standards and blockchain technology enhance the prevention and detection of sanctions evasion schemes.
Centre standards set out requirements and best practices for Centre members wishing to issue Centre-sponsored stablecoins.
Firstly, our members by being Centre members must agree to comply with anti-money laundering and counter terrorism financing laws, including economic sanctions issued by OFAC.
Second, Centre and its members actively monitor OFAC’s list of Specially Designated Nationals and Blocked Persons List (SDN) and block persons (including virtual currency addresses) added to the SDN List.
Transparent, Traceable, Immutable
Digital wallets or accounts can be pseudonymous, but they are not anonymous. This also means the activity of these wallets are not private. Government authorities can use the public keys of digital wallets to identify illicit actors. Government authorities can also trace illicit activity.
Stablecoins operate on blockchains, which are public, distributed ledgers and provide a framework of shared and trusted accounting. All transactions in USDC are recorded immediately and permanently on the blockchain via a broadcast to the rest of the blockchain and validation by third party validators or miners. Stablecoin transactions, unlike cash transactions, are traceable and also difficult to delete or alter.
The features of blockchain technology also allow our members to apply blockchain analytics to help identify and mitigate sanctions evasion. These tools help our members and government authorities better understand and track illicit financial activity.
There is currently no comprehensive regulation of digital assets along with concern that cryptocurrencies are helping Russian parties avoid anti-money laundering and sanctions controls. But all transactions, including transactions in USDC, are subject to sanctions controls, and Centre and its members recognize our duty to engage with law enforcement in blocking attempts to use USDC to transfer money across borders.