Bitcoin News Today: Stablecoin Giants Build Their Own Chains—Yet Still Walk the Public Blockchain Path

Public blockchains continue to serve as the regulatory standard in the cryptocurrency sector, despite an increasing number of corporate entities launching their own Layer 1 (L1) chains to support stablecoin usage. Legal experts affirm that the core principles of public blockchains—openness, decentralization, and regulatory clarity—remain aligned with current compliance frameworks. This has been reinforced by recent developments where major stablecoin issuers such as Tether, Circle, and Ethena have introduced their own L1 blockchains. While these initiatives aim to enhance control over infrastructure and transaction fees, they do not appear to deviate from existing regulatory norms that govern public blockchains [1].

Tether, one of the largest stablecoin issuers, is set to support a Bitcoin sidechain known as Plasma by the end of 2024. Plasma is designed to facilitate stablecoin payments with deep integration into Bitcoin’s network, allowing users to interact with real Bitcoin in smart contracts without the need for wrapped tokens. Additionally, Tether has announced Stable, a new L1 chain backed by Bitfinex and its unified liquidity protocol, USDT0. These developments underscore the growing desire among stablecoin issuers to own their financial infrastructure, enabling greater autonomy in pricing and performance optimization [2].

Circle, another major stablecoin issuer, has also entered the space with its L1 blockchain, Arc, specifically designed for institutional finance. Arc is intended to serve as a compliance-focused platform where businesses can manage their financial operations using USDC, a stablecoin backed by traditional assets. The platform aims to bridge the gap between blockchain and traditional finance by offering tools for asset tokenization and digital payment systems. This approach leverages Circle’s existing regulatory relationships to provide a secure environment for enterprises seeking to enter the crypto space [1].

Ethena’s Converge, meanwhile, has taken a different approach by positioning itself as a DeFi innovation platform. Unlike traditional stablecoins that rely on collateralized assets, USDe, the stablecoin associated with Converge, uses a delta-neutral strategy to maintain its peg to the U.S. dollar. This design allows for greater flexibility in DeFi applications while maintaining price stability. Converge also features an optional permissioning model, enabling compliance layers for regulated activities without stifling the decentralized nature of the network [1]. Legal experts argue that this hybrid model could serve as a viable regulatory solution for the future of blockchain-based finance.

The emergence of these new L1 chains is not seen as a regulatory threat but rather as an evolution of the ecosystem. Public blockchains, such as Ethereum and Solana, have historically served as the primary infrastructure for stablecoin transactions. However, stablecoin issuers are now exploring ways to reduce reliance on third-party networks by developing their own infrastructure. This shift is driven by the desire to control transaction fees, improve scalability, and increase ecosystem stickiness. For example, Tron (TRX) rose to prominence by offering low-cost USDT transfers, attracting users who previously relied on Ethereum for such transactions [2].

Despite these innovations, public blockchains remain the regulatory benchmark. Their transparent and permissionless nature aligns with global compliance standards, which many corporate L1 chains are still working to meet. Legal experts emphasize that while the technical architecture of these new chains may differ, they are ultimately subject to the same regulatory expectations regarding transparency, user privacy, and financial integrity. The challenge for corporate L1 projects will be to demonstrate their ability to meet these standards while maintaining the efficiency and cost advantages that attract users [1].

Source:

[1] Is the end of stablecoins public chains? A new attempt by ... (https://www.chaincatcher.com/en/article/2203739)

[2] Is the end of stablecoins the public blockchain? A new ... (https://m.odaily.news/en/post/5206140)