Public Blockchains Could Benefit Irish Consumer Protection: Circle

Summary

• Circle submitted a response to the Central Bank of Ireland on how public blockchains can improve consumer protection.
• The benefits of blockchain technology include increased competition, disaggregation of financial services, privacy protection and improved financial literacy through transparency.
• Circle recommended that financial supervisors support innovation while protecting consumers‘ best interests.

Circle Recommends Adoption of Public Blockchains for Consumer Protection

USDC issuer Circle has engaged with the Central Bank of Ireland to promote the benefits of blockchain technology for improving consumer protection. In its response to the discussion paper issued by the Central Bank, Circle outlined how public blockchains can help increase competition, reduce costs and improve capabilities in fighting illicit finance. The firm also provided recommendations on how financial supervisors can support innovation while ensuring consumers’ best interests are protected.

Benefits Explained

In its response, Circle highlighted several potential benefits associated with using blockchain-based payment systems for consumer protection:

• Increased Competition:

Public blockchains can allow new entrants into the market as well as increase competition among existing players. This could help reduce costs for consumers and provide them with more choice when it comes to accessing financial services.

• Disaggregation of Financial Services:

Blockchain-based payment systems have the potential to break down proprietary and closed-loop stores of data that are built up by large tech companies and other financial service providers. This could give consumers more control over their data and provide greater privacy protections.

• Improved Financial Literacy:

By making transactions visible on a public ledger, blockchains can create greater levels of transparency which may lead to improved levels of financial literacy among users. Additionally, this increased visibility makes it easier for regulators to track any irregularities or market abuse occurring on-chain.

• Enhanced Capabilities in Fighting Illicit Finance:

Real-time tracking of transaction data via public blockchains could also give regulators enhanced capabilities in identifying suspicious activity related to money laundering or terrorist financing activities. With access to this data, authorities would be better equipped in tackling these issues at an earlier stage before they become widespread problems.

Recommendations from Circle

In addition to explaining how public blockchains can benefit consumers, Circle also offered recommendations on how regulators should proceed when dealing with firms offering novel products such as stablecoins:

• Engage With Supervisory Authorities Before Applying: Firms should engage with supervisory authorities prior to filing a formal application so they have time to consider any potential risks associated with their product before it is released into the market place.
  

  < ul >< li >< b >Actively Inform Consumers About Market Abuse/Anomalies : < / li >< / ul >Regulators should actively inform consumers about any irregularities or anomalies seen in transaction data so they are aware of any potential risks associated with using a particular product or service .

  < h2 >Conclusion Overall , Circle’s response highlighted both the potential benefits and risks associated with using public blockchains for consumer protection . By engaging early with regulatory bodies , firms offering novel products such as stablecoins will be able to ensure appropriate measures are taken ahead of launch . Similarly , active efforts from both industry stakeholders and regulatory bodies will be needed if we wish to realize the full potential that blockchain technology offers when it comes safeguarding our finances .