Stablecoin freeze tools beat correspondent banking, Circle CEO says

Stablecoin technology can freeze and confiscate funds in a way that correspondent banking cannot, according to Circle chief executive Jeremy Allaire. The comments come after a roughly $6.3 billion breach at Binance.

On Wednesday, Allaire appeared on CNBC's Squawk on the Street. Circle (CRCL) uses the hacked exchange Binance as a central distribution channel for its USD Coin (USDC) stablecoin.

Can Circle's Freeze-and-Seize Argument Survive Scrutiny?

Allaire said Circle's infrastructure contains the freeze-and-seize functions regulators require on blockchain networks. He argued that correspondent banking, the system of interbank accounts that moves funds across borders, provides no such mechanism.

Circle has reportedly frozen over $1.1 billion in USDC since the Oct. 29 attack. Yet Elliptic, a blockchain analytics company, puts the amount of stolen crypto still held in wallets linked to the hack at about $3.24 billion.

Circle's exposure here is straightforward: the company extended its Binance partnership to five years in September, and Binance also purchased $100 million in Circle shares.

Will Binance Recover and Will Regulation Shift?

Net deposits are starting to come back to Binance, Allaire said. He dismissed any comparison to the run on FTX.

“There’s nothing like that at all happening here.”

Jeremy Allaire, Circle's CEO, speaking on CNBC.

Nevertheless, Reuters put net withdrawals at $4.72 billion through Monday, about 3% of platform assets according to Binance.

Allaire attributed the growing speed of attacks to autonomous software known as artificial intelligence (AI) agents. Binance, meanwhile, attributed the hack to the compromised computers of two engineers, one of which was penetrated through a fake job interview.

Allaire predicted the incident will influence future regulation. Caitlin Long, CEO of Custodia Bank, said she expects US regulators to push for stablecoin freeze provisions written into the rules.

Freeze capabilities, however, do not apply to tokens with no issuer, Bitcoin (BTC) being one example. That boundary could temper how much regulators rely on Allaire's reasoning.