Alea Research releases analysis report on 'USDCx'… "Achieves privacy and regulatory compliance"

Alea Research, a research firm specializing in virtual assets (cryptocurrencies), said on the 23rd that it has published an analysis report on the Aleo (ALEO)-based stablecoin 'USDCx' titled "Aleo—Privacy Stablecoin’s Entry into the Regulated Mainstream."

Aleo is a Layer 1 blockchain designed with both regulatory compliance and privacy protection in mind. USDCx was issued on Aleo’s own mainnet last month in collaboration with Circle. Its value is pegged to Circle’s dollar stablecoin, USDC.

The report assessed USDCx as a "privacy stablecoin that complies with regulations while protecting corporate information."

Specifically, the report said the "Selective Disclosure" feature applied to USDCx is intended to address the limitation on public blockchains where transaction amounts and recipient addresses are exposed as-is, adding that "all USDCx transaction records are encrypted, and users can disclose details only to authorized institutions through 'View Keys.'" Unlike general privacy coins, it said, USDCx is designed so that institutions that need to verify information—such as tax authorities or law enforcement agencies—can be provided proof of transaction history.

Aleo’s zero-knowledge proof (ZKP) technology is central to USDCx. The report noted that "USDCx is structured to submit only a mathematical proof of the user’s transaction to the blockchain," and that it was "designed to allow verification of transaction validity without disclosing sensitive information such as the sender, recipient, or transaction amount."

Fast transaction finality enabled by Aleo network’s proprietary consensus algorithm 'AleoBFT' was also cited as an advantage of USDCx. The report said, "Thanks to AleoBFT, USDCx can deliver efficient performance even in large-scale payment environments," adding that "commercial use cases such as inter-company settlement and payroll disbursements could expand."

Alea Research further praised USDCx for clarifying its reserve-backed structure and establishing an issuance framework that meets regulatory requirements. The report explained, "USDCx is issued via Circle’s new non-custodial smart contract infrastructure, 'xReserve,'" adding, "When users deposit USDC on a blockchain such as Ethereum (ETH), an equivalent amount is issued against it as collateral."

It continued, "xReserve is integrated with Circle’s Cross-Chain Transfer Protocol (CCTP), enabling exchanges with USDC on other chains without a separate bridge," adding that "this can reduce security risks such as bridge hacks." An Aleo official said, "USDCx is not intended to circumvent regulations, but rather to protect information that must not be exposed, such as companies’ trade secrets," adding, "We will further expand USDCx partners from the publication of this report."