Circle, the issuer of the popular USDC stablecoin, partnered with the Aleo Network Foundation to announce the launch of USDCx, a privacy-focused, USDC-backed stablecoin, on Aleo’s testnet.
This development leverages Circle’s newly introduced xReserve infrastructure, marking the second deployment on this platform following a similar integration on the Canton blockchain last week.
This is a collaborative effort with Aleo and Circle, a Layer-1 blockchain specializing in zero-knowledge (ZK) cryptography for confidential transactions.
USDCx addresses a major barrier to mainstream stablecoin adoption: the public visibility of transaction data on most blockchains, which exposes sensitive financial details like wallet balances and payment histories.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
Banking-Level Privacy: Powered by Aleo’s ZK proofs specifically zkSNARKs, USDCx encrypts transaction amounts, sender/receiver identities, and histories by default. Users can selectively disclose data for compliance, audits, or regulatory requests, ensuring “confidential yet compliant” flows without full anonymity.
Each USDCx token is 1:1 backed by native USDC held in Circle’s xReserve vaults. It supports seamless cross-chain transfers via Circle’s Cross-Chain Transfer Protocol (CCTP) and Gateway systems, unifying liquidity across networks without risky third-party bridges.
As a smart contract-enabled asset on Aleo, USDCx supports programmable payments, such as automated payroll or conditional transfers, while maintaining privacy. Unlike standard USDC, USDCx loses its privacy features when bridged to non-Aleo chains, emphasizing its design for Aleo’s privacy-native environment.
Live on Aleo Testnet as of December 9, 2025, for developers and early testers to experiment with private stablecoin applications. Mainnet rollout is expected by late January 2026, pending further testing and regulatory alignment.
This is Circle’s new service enabling blockchains to mint their own USDC-backed tokens. It builds on Circle’s broader stablecoin ecosystem, including the upcoming Arc Layer-1 network dedicated to stablecoins.
Public blockchains’ transparency has deterred banks and enterprises from using stablecoins for high-value or sensitive operations, like cross-border payroll or treasury settlements. USDCx flips this by offering “HTTPS for finance”—secure, private defaults akin to how encryption revolutionized the web.
Firms like Request Finance and Toku, which handle global salary payments in crypto, see USDCx as a way to encrypt flows without public exposure. Platforms betting on events (e.g., elections or sports) want to hide trading histories to protect user identities.
With USDC’s market cap exceeding $78 billion nearly double from a year ago, USDCx could accelerate tokenized assets in finance. BlackRock’s CEO Larry Fink recently noted that “every asset can be tokenized,” and privacy tools like this remove a key friction point.
Aleo, backed by investors like a16z, SoftBank, and Coinbase Ventures with $28M raised in 2021, positions itself as the go-to for privacy-preserving DeFi and payments. Circle’s Chief Commercial Officer, Kash Razzaghi, highlighted how USDCx “pairs high-quality reserve assets with on-chain visibility and privacy to strengthen the foundation that businesses rely on as they scale stablecoin use globally.”
Aleo’s COO, Leena Im, added that this shift mirrors the internet’s evolution from HTTP to HTTPS, making privacy the new default. The announcement sparked immediate discussion on X with over 168,000 views on Aleo’s official post within hours.
Users praised it as a “breakthrough” for privacy in crypto, with one noting, “imagine buying coffee and the barista instantly knows your entire net worth—that’s the current state of crypto. Privacy is necessary for real adoption.”
Others highlighted its potential for institutional inflows, questioning if it will “drive more institutions to adopt crypto for privacy transactions.” This launch aligns with regulatory tailwinds, like the U.S. GENIUS Act, which clarifies rules for dollar-pegged stablecoins.
As privacy becomes a core narrative in the 2025-2026 cycle, USDCx could position Circle and Aleo at the forefront of compliant, scalable blockchain finance. For developers, Aleo’s docs detail how to integrate USDCx—check them out to build on testnet today.