While the world was still rejoicing the news of two of the largest cryptocurrency companies, Coinbase and Circle, joining forces to form “CENTRE Consortium” and work on the Circle’s stablecoin USDC, controversy struck. According to the news that has surfaced, the user agreement of Circle’s stablecoin, has listed down events under which the company could freeze coins and seize accounts creating a centralized scenario.
Coinbase and Circle can control your UDSC’s
Circle had launched its own U.S. dollar version of what’s known as a “stablecoin” in May. The fintech company, valued at $3 billion in its most recent funding round, has made a series of deals and announcements in a long-term bet that despite bitcoin’s price slump, the crypto economy is here to stay. The “USD Coin” was one of those bets, and it received a major boost when it was announced that the coin was going to be listed and traded Coinbase’s popular cryptocurrency exchange. This is the first time Coinbase has supported a stablecoin, which it said is “fundamentally different” from other cryptocurrencies.
According to the news released during the launch, the framework for the coin is what’s called “open sourced,” meaning multiple developers can work on the project and help its development. The agreement to mentions the USDC decentralized and of open source nature. But clause 24 of the user agreement does allow Circle rights to
“suspend or terminate your USDC Account which can result in the potential forfeit of any US Dollar funds otherwise eligible for redemption”
The agreement lists down 11 15 “Prohibited transaction” under which it can act against the user accounts and freeze their USDCs.
Certain prominent one includes using USDC in relation with
- weapons of any kind, including but not limited to firearms, ammunition, knives, explosives, or related accessories;
- controlled substances, including but not limited to narcotics, prescription drugs, steroids, or related paraphernalia or accessories;
- money-laundering or terrorist financing;
- any sort of Ponzi scheme, pyramid scheme, or multi-level marketing program;
- counterfeit goods, including but not limited to fake or “novelty” IDs;
- lottery contracts, layaway systems, or annuities;
The company has also listed gambling in its prohibited activity list but also has attached a note to it saying
“We understand that gambling may be legal in your jurisdiction, but unfortunately, we cannot allow you to use Circle in connection with these activities.”
While tracking most of these transactions would require Circle to have significant control over the USDC protocol, it also puts addresses into blanket blacklist which use coins like Augur and Funfair- as they classify into gaming and gambling industry.
What is your view on the USDC restricted and prohibited list? Do let us know your views on the same.