stablecoin

The FoRC: How Stablecoins Are Making Finance Safer

Norbert Gehrke

12 Sep 2025 — 9 min read

The inaugural episode of "The FoRC: The Future of Regulatory Compliance," a new series from Solidus Labs, features Dante Disparte, Chief Strategy Officer and Head of Global Policy at Circle. Chen Arad, the host, introduces Disparte not just as a policy expert but as the "Hamilton of Crypto"—a multilingual, multicultural, entrepreneurial, and prolific intellectual born in the Caribbean (Puerto Rico) who, like the musical's protagonist, is "writing like he's running out of time."

When asked about this relentless drive, Disparte humbly accepts the compliment and frames his work not as a job, but as a profound mission. He believes that digital assets and open financial infrastructure represent a critical "fork in the road" for society. One path leads to leveraging technology to "bend the arc of Moore's Law in humanity's favor," while the other does not. For Disparte, the choice is clear: to pursue this future with urgency, while simultaneously building it on a foundation of safety, soundness, and financial integrity. His goal is to harmonize three core principles: innovation, inclusion, and integrity, viewing the work at Circle as being fundamentally in the interest of humanity.

The Foundational Vision: Financial Inclusion and the Path to Scale

The conversation revisits a 2020 article Disparte wrote for the Harvard Business Review, where he argued that blockchain-based payment systems could bring the world’s 1.7 billion unbanked people into the formal economy, including a staggering 25% of U.S. households. At the time, this was a forward-looking vision. Today, with stablecoins settling more dollar volume than Visa and Mastercard combined, Arad asks how close we are to realizing that vision.

Disparte outlines three crucial preconditions that needed to be met for his 2020 vision to become a reality:

Technological Maturation: The industry had to evolve from its "dial-up phase" to a "broadband phase." Blockchains needed to become faster, cheaper, and more scalable to handle global transaction volumes effectively.
Last-Mile Infrastructure: There needed to be ubiquitous access to basic internet-connected devices and, critically, privacy-preserving cryptographic wallets that could serve as individual financial endpoints for anyone, anywhere.
Legal and Regulatory Clarity: Disparte identifies this as the single most significant breakthrough. For years, the digital asset industry operated in a gray area. This ambiguity forced a choice upon entrepreneurs: build in the light of day or operate in the shadows. The lack of clear rules meant the industry's reputation was often defined by its worst actors. Today, with regulatory frameworks emerging globally, Disparte asserts that "if you're an unregulated operator in crypto, it's because you chose to not be regulated."

With these preconditions now largely in place, Disparte argues that "we have no excuse" for the persistent problems of costly remittances, slow domestic payments, and a financial system that still takes "bank holidays." The next five years, he predicts, will be about building on this new foundation to solve these long-standing issues.

Tackling Financial Crime: From Reputational Hurdle to Systemic Advantage

Arad raises a critical point from Disparte’s earlier writings: the openness of blockchain, while a feature for inclusion, also made it popular in the "darker corners of the internet," creating a significant hurdle for mainstream adoption. The conversation delves into how the industry is addressing financial crime.

Disparte begins by challenging the narrative that crypto is inherently linked to illicit activity, using the analogy, "Why do people rob banks? Because that's where the money is." He points out the double standard applied to the industry. When Danske Bank was implicated in a multi-hundred-billion-dollar money laundering scandal, the entire banking system wasn't forced to atone for its sins. Yet, when a single digital asset like Bitcoin was used in the Colonial Pipeline ransomware attack, the entire "crypto" category was conflated with criminality.

He argues that the true innovation lies in the tools that have emerged to combat this risk. A "digital asset fire brigade"—a cottage industry of financial integrity firms like Solidus Labs—has built a suite of universally accessible tools that give bad actors "few places to hide." Key features of blockchain technology, such as the discoverability and permanence of transactions, have enabled the creation of sophisticated monitoring systems that are like the "smoke detectors, fire alarms, and lane departure systems" for this new internet financial system.

Disparte makes a bold claim: when you stack up the scorecard, the digital asset ecosystem can combat illicit finance exponentially better than the traditional financial system. He emphasizes a shared objective among good actors: to ensure that financial access, which he calls a human right, does not come with the corollary risk of ransomware, terror financing, corruption, or fraud. By aligning responsible industry players with advanced integrity firms, the sector has a real chance to create a safer financial system for everyone.

The Regulatory Breakthrough: The "Genius Act" and the Dawn of Clarity

The conversation pivots to the seismic shifts in the U.S. regulatory landscape, highlighting the recent passage of the (fictionalized for the podcast) "Genius Act," a landmark piece of stablecoin legislation. Disparte, who was present from the early Libra hearings to the White House signing ceremony, provides an insider's perspective on its significance.

He characterizes the Genius Act as arguably "the first piece of financial regulation in U.S. history that is unequivocally pro-growth [and] pro-competition." He dispels any notion of regulatory capture, emphasizing its deep bipartisan roots. The bill originated under Democratic leadership in the House Financial Services Committee, was advanced under Republican leadership, and saw 108 Democrats vote in its favor. This bipartisan effort, he argues, makes the final product durable and able to withstand political changes.

The Genius Act is more than just a crypto bill; Disparte frames it as a cornerstone of U.S. national security and economic competitiveness. It enshrines privately issued, fully-reserved digital dollars as the official U.S. strategy in the global "digital currency space race," allowing the U.S. to export its regulatory standards and the dollar itself.

Crucially, the Act sets a new, higher bar for safety and soundness. It mandates that stablecoins be 100% backed by high-quality liquid assets, and it entitles holders to a right of redemption at par, even in the event of an issuer's bankruptcy. It also imposes criminal penalties on executives who misstate reserves. In a remarkable detail, Disparte notes that if a traditional bank wanted to issue a stablecoin under this law, it would have to do so from a separately capitalized, fully-reserved entity that looks more like Circle than a bank—a standard more conservative than global banking rules.

However, the Genius Act is only the first step. It is narrow in scope, covering only the issuance and redemption of payment stablecoins. The next critical piece of the puzzle is comprehensive market structure legislation (referred to as the "Clarity Act"). This would regulate the secondary market activities—trading, custody, and defining what constitutes a security versus a commodity—which is where most of the industry's misconduct has historically occurred. Without it, the U.S. will still lag behind comprehensive frameworks like Europe's Markets in Crypto-Assets (MiCA) regulation. Disparte concludes with an optimistic prediction, venturing that such a market structure bill could pass before the end of the year.

The Core Thesis: How On-Chain Finance Can Be Safer

The central theme of the episode is how stablecoins and blockchain can make finance not just faster or more open, but fundamentally safer. Disparte and Arad explore this from multiple angles.

Prudential Safety: The conversation begins with economic safety. No traditional bank can withstand a full run on its deposits due to the fractional reserve model. In contrast, the Genius Act legally enshrines a fully reserved model for payment stablecoins, offering an unprecedented level of prudential safety for a payment instrument.
Rethinking Compliance: Beyond the "Sledgehammer" of the BSA: Arad introduces a recent critique by SEC Commissioner Hester Peirce, who described the 50-year-old Bank Secrecy Act (BSA) as a "blunt surveillance tool" and a "sledgehammer." The BSA forces banks to file millions of low-value suspicious activity reports (of which 96% lead to no action), creating a system of mass surveillance with low efficacy. The question becomes: can blockchain’s transparency enable a better model?
A New Paradigm: Presumption of Innocence and Surgical Intervention: Disparte agrees and proposes a "Financial Services Bill of Rights" built on two principles:

The Right to Lawful Use: The use of money, when lawful, should be free.
Presumption of Innocence: The current system operates on a "presumption of guilt," where individuals and entities must constantly prove they are not bad actors. Blockchain finance flips this pyramid on its head. It allows for a "presumption of innocence" for basic financial access, while the technology's transparency provides "proof of guilt" through immutable "digital breadcrumbs" when illicit activity occurs.

This new paradigm allows for a far more surgical and just approach to enforcement. Instead of the current practice of "de-risking"—where banks cut off access to entire regions or countries out of fear of one bad transaction—blockchain allows authorities to de-platform an individual bad actor down to the specific wallet address. This means financial access can be extended even to hostile or high-risk jurisdictions, as the controls and values are embedded in the rails themselves. This, Disparte argues, is how the U.S. can weaponize its financial rails for strategic advantage, rather than weaponizing the dollar itself, which encourages de-dollarization.

The "Open Party" Analogy and Ecosystem Monitoring: Arad offers a powerful allegory to illustrate this shift. Traditional finance is like a closed party with a bouncer. The bouncer (compliance) performs binary checks at the door (KYC, etc.), and if you don't meet every criterion, you can't get in. It's an exclusionary, gatekeeping model that is still ineffective at stopping bad behavior inside.Blockchain finance, with stablecoins, is an open party. Everyone can participate, making it bigger and more dynamic. The old bouncer model doesn't work. Instead, compliance becomes like a sophisticated drone hovering above the party. It uses the transparent data from the entire ecosystem to monitor for patterns of illicit activity. When it detects a problem, it can surgically dive down and remove the single bad actor without shutting down the party or barring everyone else.

This concept of ecosystem monitoring—using the blockchain's public data to monitor holistically rather than intrusively verifying every single transaction—is the key. It allows regulators to be both more effective and less invasive, a future already being contemplated by regulators from Hong Kong to the U.S.

Geopolitical Context: The CBDC Debate and Circle's Future

The discussion touches on the recent political drama where an anti-Central Bank Digital Currency (CBDC) movement nearly derailed the Genius Act—a moment Arad calls the "crypto Cuban missile crisis." Disparte provides a calming perspective, labeling it "much ado about nothing." He points out that the Federal Reserve's own research (Project Hamilton) indicated that the Fed would require explicit congressional authority to launch a retail CBDC anyway. The anti-CBDC push, while tapping into legitimate privacy concerns, was fighting a battle that hadn't even begun. Meanwhile, the real victory for the U.S. dollar is happening organically: 99% of stablecoins are dollar-backed, meaning the private sector is effectively winning the digital currency space race for America.

Finally, the conversation turns to Circle's own evolution. Disparte emphasizes that Circle is not merely a stablecoin issuer but is building the foundational layers of an "internet financial system." He highlights three key initiatives:

Cross-Chain Transfer Protocol (CCTP): A piece of market-neutral infrastructure that allows USDC to be securely moved between blockchains, solving the vulnerability of third-party bridges.
Circle Payments Network: A neutral orchestration layer designed for institutional cross-border payments, providing the missing link needed to unlock stablecoins' potential for wholesale money movement.
ARC: A new, high-performance, privacy-preserving Layer 1 blockchain Circle is developing to support USDC, other stablecoins, and the broader developer ecosystem.

These initiatives show Circle's commitment to building out the full stack of infrastructure needed for a new financial system.

Conclusion: A Future Where the Technology Fades Away

For his final question, Arad asks Disparte what headline he hopes to read about Circle in ten years. Disparte's answer is profound: he hopes to read nothing about Circle. He draws an analogy to cloud computing. Initially, "the cloud" was a buzzword that companies used to differentiate themselves. Today, it is simply the invisible, ubiquitous infrastructure upon which the modern internet runs.

This, he argues, is the ultimate goal for blockchain and crypto. The technology should fade into the background. The distinction between "TradFi" and "DeFi" should disappear, leading to a convergence where users simply experience a better, faster, safer, and more inclusive financial system without needing to know or care about the underlying rails. Arad echoes this sentiment with the example of Netflix: users don't say they're "using the internet"; they just enjoy a vastly superior entertainment experience enabled by it. The ultimate success for the industry will be when no one talks about the blockchain anymore, because its benefits have become a seamless part of daily life.