Circle releases white paper on "Stablecoin Payment Network"

In the article " Digital Dollar on the Internet of Value - 2025 USDC Market Economic Report " released by Circle in early 2025, the triple narrative of USDC was clarified: (1) financial upgrade of the Internet; (2) through the USDC Internet; (3) using network effects to expand USDC application scenarios.

Author: Will Awang , investment and financing lawyer, focusing on Web3 & Digital Asset; independent researcher, focusing on tokenization, RWA, payment, DeSci

Cover: Circle

In the article " Digital Dollar on the Internet of Value - 2025 USDC Market Economic Report " released by Circle in early 2025, the triple narrative of USDC was clarified: (1) financial upgrade of the Internet; (2) through the USDC Internet; (3) using network effects to expand USDC application scenarios.

Circle, which currently holds a 26% market share in stablecoins, is clearly no longer satisfied with the first two narratives. Its newly launched Circle Payments Network is its way of capturing the value of USDC or stablecoins in the global network as a globally compliant stablecoin issuer.

The U.S. dollar and the Internet itself have strong network effects. In the real world and on the Internet, the U.S. dollar is a currency with network effects. Blockchain technology gives USDC more powerful functions and new application potential than traditional U.S. dollars, while relying on traditional Internet networks for implementation.

Circle is building an open technology platform with USDC at its core, building on the strength and widespread use of the U.S. dollar today and leveraging the scale, speed, and cost advantages of the Internet to achieve similar network effects and practicality for financial services.

Circle Payments Network is a platform where Circle uses its strong compliance background to bring together financial institutions (USDC services) in a compliant, seamless and programmable framework to coordinate global payments of fiat currencies, USDC and other payment stablecoins.

As a result, fiat currency no longer needs to circulate through the old traditional SWIFT system, and the digital dollar that uses blockchain as the settlement layer will be its new channel.

In essence, Circle's payment network, which uses blockchain as the settlement layer, is a funeral invitation to traditional payment channels such as SWIFT/VISA/Mastercard, allowing us to enter a great era of change from postal mail to email, from horse-drawn carriages to trams, and from transatlantic cable telegraphs to blockchain Internet value transmission.

( Web3 Payment Research Report: The full-scale attack by industry giants is expected to change the existing encryption market landscape )

What is important is Circle's positioning of the Circle Payments Network: a new protocol layer built on a comprehensive, open, and Internet-based settlement system with stablecoins at its core. This positioning is compatible with various settlement layer public chains, rather than getting caught up in a war among public chains to seize financial infrastructure.

Dr. Xiao Feng of Hashkey gave the public chain positioning based on the essence of finance: the new generation of financial infrastructure is not only a marginal improvement on the existing system, but also brings disruptive development in terms of transactions, clearing, and settlement, forming a new financial paradigm.

What is meaningful is that Circle aims to build an open network based on blockchain, which already has the prototype of VISA network. We may find some answers to the subsequent evolution in the development history of VISA. This is in sharp contrast to the relatively closed-loop networks of Ripple & RippleNet , Stripe & Bridge .

In October 2023, when I shared Web3 payments with Ant, I was thinking: Is it a better solution to put fiat assets on the chain at both ends and settle through stablecoins? Obviously, a year and a half later, Circle gave a clear answer and a clear use case.

Therefore, this article compiles Circle’s Circle Payments Network Whitepaper to look at its design principles, real-world use cases, potential use cases and growth opportunities in the future, and the governance model of this VISA-like network organization.

1. White Paper Overview

Stablecoins have long been considered to have the potential to become the basis for payments and capital flows on the Internet. However, until recently, stablecoins, as digital cash, have been mainly used in the global digital asset market and decentralized finance (DeFi) field.

With the launch of Circle Payments Network (CPN), Circle is taking stablecoins one step further with the potential to transform the global payments system—just as previous eras of Internet innovation transformed media, commerce, software, communications, and other industries. These sea change transformations have dramatically improved the customer experience, reduced costs, increased speed, and driven economic growth for individuals and businesses around the world.

To realize this potential, the Circle Payments Network (CPN) serves as an infrastructure designed to overcome many of the barriers that have so far limited the adoption of stablecoins in mainstream payments. These barriers include barriers to entry, vague compliance requirements, technical complexity, and concerns about the secure storage of digital cash.

Circle Payments Network (CPN) brings together financial institutions in a compliant, seamless, and programmable framework to coordinate global payments in fiat, USDC, and other payment stablecoins.

Business and individual customers of these financial institutions can enjoy faster and lower-cost payment services than traditional payment systems, which are often limited by fragmented networks or closed systems. Crucially, Circle Payments Network (CPN) lays the foundation for this entire ecosystem by making infrastructure, eliminating many of the technical complexities and operational barriers that have hindered the adoption of mainstream stablecoins so far, including the need for enterprises to custody stablecoins themselves. Circle Payments Network (CPN) also opens the door to breakthroughs in programmable money, unlocking entirely new uses for money in global value exchanges.

This white paper lays out the design principles of the Circle Payments Network (CPN), outlines initial and near-term use cases, and proposes potential future use cases and growth opportunities. This paper is intended to help financial institutions, payment companies, application developers, innovators, and other stakeholders understand their role in building and leveraging the Circle Payments Network (CPN) - and how the network enables them to innovate and pass on the benefits of stablecoins to their customers.

II. Introduction

2.1 Flaws in the global financial payment system

The global economy is more interconnected than ever before, yet unlike other parts of the economy, the infrastructure that supports the flow of money still relies heavily on frameworks that predate the internet era.

Previously, it was impossible to provide a “Money Protocol” that could transfer value over the Internet in a completely native digital form.

The U.S. Automated Clearing House (ACH) and other similar protocols are now core components of the fragmented global payments landscape, and these payment protocols emerged around the world in the early 1970s. Although some recent developments, such as the Single Euro Payments Area (SEPA) in the Eurozone, and national real-time payment systems such as PIX in Brazil and the Unified Payments Interface (UPI) in India, have increased the speed of domestic transactions, they still lack a global interoperability standard and global scale, and do not leverage the openness and scalability of programmable money built on open blockchain networks.

Businesses and individuals around the world are paying a high price for relying on this traditional payment infrastructure. According to a McKinsey report (Global Payments in 2024), the global payment industry's revenue has exceeded $2.4 trillion per year. Most of this "revenue" is generated in the form of fees charged to senders and receivers , reflecting the operational complexity and intermediation of traditional infrastructure - in effect a tax on global businesses and households.

The current reality is that international wire transfers can cost up to $50 per transaction, and intermediaries along the way often charge additional fees. According to the World Bank, the global average cost of sending $200 was 6.65% in the second quarter of 2024. In addition, foreign exchange conversions further exacerbate these challenges, introducing expensive foreign exchange fees and price fluctuations.

Fragmented settlement processes in the correspondent banking system continue to impose significant economic costs on businesses and society. For importers and buyers, waiting days for payments to clear can erode their cash flow positions and complicate liquidity planning. For exporters and sellers, unpredictable multi-day settlement windows mean they must rely more on costly short-term working capital borrowing to sustain short-term operations. Recipients who rely on cross-border remittances for food, shelter, and other basic needs risk losing vital revenues to traditional intermediaries, while enduring payment delays and, in some cases, facing the inherent risks of handling cash in a crime-prone environment.

( Digital Dollar on the Value Internet - 2025 USDC Market Economic Report )

2.2 Change is coming

Change is long overdue. While the internet has revolutionized nearly every aspect of global commerce over the past few decades, the way money moves still relies on fragmented legacy networks that lack transparency, efficiency, and innovation. While some countries have successfully implemented national real-time payment systems, these solutions are not scalable globally and have limited access to developers.

In the half century since the advent of early payment messaging and settlement systems such as ACH, global communications technology has advanced to connect people around the world in an instant. Today, billions of people can watch a movie on their phone while riding the subway, have instant access to all of human knowledge at almost zero cost, and can buy and sell nearly any product from around the world.

It’s time for a new way to move money around the world — one that operates 24/7, is seamless, and is designed to eliminate the inefficiencies of legacy payments systems, while building on and integrating the solid foundations of the traditional financial system.

( Digital Dollar on the Value Internet - 2025 USDC Market Economic Report )

2.3 Internet-based currency settlement layer - Circle Payments Network

This vision is becoming a reality with the launch of Circle Payments Network (CPN), a new protocol layer built on a comprehensive, open, internet-based settlement system, with USDC, EURC, and other regulated payment stablecoins at its core. By connecting open platforms with global scale and reducing intermediaries, CPN enables the movement of money in ways that traditional closed networks cannot.

Importantly, CPN does not transfer funds directly; rather, it serves as a marketplace for financial institutions and acts as a coordination protocol to coordinate global capital flows and the seamless exchange of information.

The CPN marks the first time that a regulated settlement asset, in the form of a stablecoin, has been combined with a coordination and governance layer designed for financial institutions. This integration connects traditional payment systems with assets like USDC and EURC, while establishing a trusted counterparty framework for more efficient, less intermediary global settlement.

By introducing a new “clearing layer” of digital dollars based on compliance and operating around the clock, CPN lays the foundation for cross-border settlement on an Internet scale.

2.4 Benefits of Circle Payments Network

A. Internet financial payment services

CPN will benefit billions of people and tens of millions of businesses by enabling them to access money and other financial services in the same way they access other transformative global internet services. Payers can choose to make payments using either fiat or stablecoins, while payees (whether businesses or individuals) can choose to keep stablecoins or convert them to local currency when they receive the money. CPN will make near-instant, borderless payments a universal reality.

The launch of CPN makes it easier to imagine a future where international suppliers are able to receive cross-border payments almost instantly and at low cost through a modern, compliance-first platform that supports global supply chains; small merchants are able to receive payments in near real time without high fees eating into sales margins; global sellers are able to directly access new markets; content creators are able to receive micropayments from consumers through the cost efficiencies of stablecoins; and remittance recipients are able to receive a larger portion of the remittance amount, thereby increasing purchasing power where it is needed most.

B. Reduce technical complexity

In addition to being an upgrade to many of today’s inter-institutional payment networks, which are often burdened by legacy infrastructure, closed ecosystems, and slow or expensive settlements, CPN is designed as a modern payment coordination layer based on stablecoins and blockchain to achieve scalability.

Although blockchain-based payments have gained some traction, they are not inherently frictionless or trustworthy, especially in an inter-institutional setting where features such as settlement assurance, reversibility, compliance, standardized protocols, and strong security are essential requirements. CPN further reduces technical complexity and minimizes the operational and financial challenges that have so far prevented stablecoins from entering mainstream payments and commerce, paving the way for a more efficient, inclusive, innovative, and transparent financial ecosystem.

C. Reduce costs and increase efficiency

From a cost and efficiency perspective, CPN is a powerful alternative to traditional cross-border payments. Although there are fees associated with purchasing stablecoins and exchanging them back to fiat, in many markets outside the United States, the costs of these “on-ramp and off-ramp currency acceptances” are falling and may be lower than the cost of obtaining dollars through a bank.

Traditional USD transfers can be expensive and slow for both senders and receivers, making both parties more reliant on short-term working capital financing (as discussed above). By enabling near-instant settlement and reducing reliance on intermediaries, CPNs can unlock significant cost efficiencies.

Additionally, as an open platform, CPN has the potential to facilitate a competitive market for deposit and withdrawal currency acceptance, foreign exchange and other services, further reducing costs and improving access.

D. Transparent, secure and scalable

The CPN is a transparent, secure and scalable infrastructure designed to help financial institutions better serve their corporate and individual customers. Crucially, the CPN will be able to unlock these efficiencies without sacrificing compliance. Circle has established a rigorous governance framework for the CPN, requiring participating financial institutions to comply with global anti-money laundering and counter-terrorism financing (AML/CFT) standards and economic sanctions requirements.

E. Open infrastructure promotes innovation

Importantly, CPN does not transfer funds directly; instead, it serves as a marketplace for financial institutions and acts as a coordination protocol to coordinate global capital flows and the seamless exchange of information. As the network operator, Circle defines the CPN protocol and provides an application programming interface (API), developer software development kit (SDK), and public smart contracts to coordinate global capital flows.

The growth and success of CPN is not limited to the Circle ecosystem, but will also rely on participants outside of Circle to jointly unlock economic value. The network will provide a fertile ground for banks, payment companies, money acceptance service providers, application developers, and other regulated stablecoin issuers to innovate together to provide greater value and better experiences for their own customers.

It is based on this open public blockchain infrastructure that CPN and regulated payment stablecoins provide a strong foundation for builders to launch on-chain applications that use these networks to seamlessly transfer funds.

CPN provides building blocks for innovators and builders to develop new user experiences and support a wide range of payment use cases. Over time, builders will be able to create a vibrant ecosystem of modules and application services on top of CPN - building a third-party functional market to benefit CPN participants and end users, and unlocking a new and powerful distribution platform for fintech developers.

3. Circle Vision

Through the Circle Payments Network (CPN), Circle is building a new ecosystem of platforms and networks that will create value for every stakeholder in the global economy, helping to accelerate the benefits of this new internet-based financial system to society:

enterprise:

Importers, exporters, merchants and large corporations : can leverage CPN-enabled financial institutions to eliminate significant costs and friction, strengthen global supply chains, optimize cash management operations, and reduce reliance on expensive short-term working capital financing.

personal:

Remittance senders and receivers, content creators, and other individuals who frequently send or receive small payments : will gain greater value, and financial institutions using CPN will be able to provide these improved services faster, cheaper, and more simply.

Ecosystem Builder:

Banks, payment companies and other providers : can use CPN's platform services to develop innovative payment use cases, leveraging the programmability of stablecoins, SDKs (software development kits) and smart contracts to create a thriving ecosystem. Over time, this will be able to fully unleash the full potential of stablecoin payments for businesses and individuals. In addition, third-party developers and businesses can introduce value-added services to further expand the network's functionality.

All participants and end users of the CPN network will be able to benefit from an open and continuously upgradeable funds circulation infrastructure, which will not only reduce the cost and increase the speed of cross-border payments, but also ensure the technical readiness of the Internet financial system.

IV. Use Cases

Circle Payments Network (CPN) aims to support a wide range of payments and value transfer use cases by enabling seamless, efficient and secure transactions on supported blockchain networks using regulated stablecoins.

Its compliance-oriented architecture allows Originating Financial Institutions (OFIs) to discover and connect to Beneficiary Financial Institutions (BFIs) through CPN, while empowering ecosystem builders to develop innovative solutions for individuals, businesses and institutions.

4.1 Business Payments

A. Supplier Payments

Speed up and simplify cross-border payments between companies by shortening settlement times and removing intermediaries.

A manufacturing company in Mexico needed to pay a steel supplier in Germany but wanted to avoid high foreign exchange fees and multi-day bank transfers. The company's originating financial institution (OFI) converted Mexican pesos (MXN) into USDC, contacted the German beneficiary financial institution (BFI) through CPN and sent USDC, which then seamlessly converted USDC into Euros and instantly settled the payment to the supplier's account.

B. Retail Payments

Boosting global online commerce with secure, efficient and flexible payment options.

A fashion retailer based in Brazil sells goods to US customers. The retailer’s BFI contacts an OFI through a CPN to receive payments in USD. The OFI converts USD into USDC and sends it to the BFI, which then seamlessly converts the USDC into Brazilian Real (BRL) or holds it as USDC at a digital asset custodian on behalf of the retailer, allowing the retailer to receive funds instantly, faster than traditional payment processors, and choose to keep working capital in digital dollars.

C. Trade Finance

Simplify and secure international trade payments.

A US-based textile importer placed an order with an Indian manufacturer, looking to reduce the time and cost of traditional trade financing. The importer’s OFI converted US dollars (USD) into USDC and connected to a BFI in India through CPN to transfer funds. The BFI managed the custody of USDC through smart contracts and settled Indian rupees (INR) to the manufacturer after verifying the shipping documents. This approach enabled faster settlement and reduced counterparty risk while providing custody services using the innovation of smart contracts .

D. Payroll and Salary Disbursements

Enables businesses to process global payroll payments with minimal fees and instant settlement.

A multinational company pays salaries to remote employees in multiple countries. Instead of relying on traditional banking channels, the company converts local currency into USDC through its OFI and immediately distributes the salaries to employees through multiple BFIs discovered by CPN. These BFIs receive USDC from the OFI and complete the final payment in each employee's local currency.

E. AI payments

In the future, CPN will support autonomous artificial intelligence agents (AI Agents) to send and receive payments on behalf of users or systems, enabling real-time value exchange.

A logistics company uses an AI agent to book freight services across borders. When the agent selects a service provider in Singapore, it uses OFI with CPN integration to convert U.S. dollars (USD) into USDC and automatically sends the payment to BFI in Singapore, which then converts it into Singapore dollars (SGD). The entire payment process is executed programmatically through smart contracts , minimizing manual steps and enabling intelligent cross-border machine-to-machine payments.

4.2 Consumer Payments

A. Remittances

Empower individuals to transfer money quickly and cost-effectively, without high fees and delays.

A user living in the United States wants to send money to his family in the Philippines. As an originating financial institution (OFI) in the United States, the remittance company converts US dollars (USD) into USDC, and simultaneously converts USDC into Philippine pesos (PHP) through a local beneficiary financial institution (BFI) in the Philippines dynamically discovered by CPN, sending the funds to his family in near real-time at a fraction of the cost of traditional remittances.

B. Subscriptions

Support recurring payments for digital services through programmable stablecoin billing.

A digital media platform provides premium subscription services to users around the world. Every month, the user's digital wallet initiates a USDC payment through the Originating Financial Institution (OFI), which is routed through the platform's Beneficiary Financial Institution (BFI) discovered by CPN. The BFI receives the funds and holds them as USDC at a digital asset custodian on behalf of the media platform, or converts them into local fiat currency as needed and credits them to the media platform's account.

C. Micropayments and Content Monetization

Enable instant, low-cost micropayments for content creators and digital services.

A Brazilian content creator receives small donations from fans around the world through CPN, using a local originating financial institution (OFI) and a beneficiary financial institution (BFI) that supports CPN. Instead of facing long delays and high platform fees, fans can send stablecoins instantly - achieving fast and low-cost monetization.

D. E-commerce

Expanding consumer access to the global online marketplace through a fast payment experience.

A customer in the UK buys electronic products from a seller in South Korea through an international e-commerce platform. At checkout, the customer pays in British Pounds (GBP) through a local originating financial institution (OFI), which converts the funds into USDC and transfers it to a beneficiary financial institution (BFI) in South Korea. The BFI converts the USDC into Korean Won (KRW) and deposits it into the seller's account.

4.3 Institutional Payments

A. Capital Markets Settlement

Improve transaction efficiency by enabling faster and more transparent settlements between financial institutions, reducing counterparty risk and operating costs.

A US asset manager executed an over-the-counter (OTC) bond trade with a European investment bank, but wanted to avoid the T+2 settlement delay, and the capital inefficiencies and counterparty risk that comes with it. The asset manager's originating financial institution (OFI) converted US dollars (USD) into USDC and connected to a European beneficiary financial institution (BFI) through CPN to transfer USDC, which then settled the trade instantly for the investment bank in Euros (EUR).

B. Foreign Exchange (FX)

By improving the efficiency of multi-currency operations, it simplifies currency conversion and solves the problems of high foreign exchange rates from traditional providers and the complexity and delays of multi-currency management.

A European investment firm wants to finance a real estate acquisition in Japan but wants to avoid high FX fees and delays. The investment firm’s OFI converts Euros (EUR) into EURC, which is received by Japan’s BFI and seamlessly converted to Japanese Yen (JPY) on-chain at a competitive FX venue for instant settlement.

C. Treasury Services

Simplify capital repatriation by efficiently converting overseas earnings back to the company's home market.

A US-based enterprise software provider provides cloud-based solutions to numerous businesses in Southeast Asia. To repatriate revenue from the region to the US, the company’s US-based Beneficiary Financial Institution (BFI) found a local Originating Financial Institution (OFI) in the Philippines through CPN. The OFI collects Philippine Peso (PHP) payments from corporate clients, converts them into USDC, and transmits them to the US-based BFI. The BFI then converts the USDC into US dollars (USD) and deposits it into the company’s treasury account, enabling faster and compliant global revenue consolidation.

D. Government and Humanitarian Payments

Provide a safe, reliable and efficient channel for large-scale payments, from disaster relief funds to institutional transfers.

An international non-governmental organization (NGO) uses stablecoins to distribute disaster relief funds. The NGO initiates payments through its originating financial institution (OFI), which converts local fiat currency into USDC and transfers it to the beneficiary financial institution (BFI) operating in the recipient area. The BFI then either delivers the funds directly to the beneficiary's digital wallet or converts USDC into local fiat currency and deposits it into its bank account, ensuring transparency, accelerating the delivery of funds, and enhancing accountability for aid distribution.

E. Decentralized Finance Integrations

Support DeFi innovators and unlock the potential of mainstream-scale on-chain finance by providing a foundation for lending, borrowing, saving, and more.

A properly licensed and regulated DeFi lending platform integrates USDC and EURC to provide loan and savings products. With CPN's infrastructure, the platform can facilitate seamless cross-border transactions, reduce volatility, and support compliant institutional client flows while building trust among a diverse user base.

5. CPN Ecosystem Stakeholders and Roles

The CPN ecosystem consists of ecological stakeholders and participants who play an important role in facilitating global payments, driving technological innovation, and promoting network governance, economic value creation, and network adoption.

5.1 CPN Governance

Circle serves as the lead governance and standards-setting body for CPN, as well as being the network operator.

Circle’s main responsibilities include:

• Develop and maintain the Circle Payments Network Rules (“CPN Rules”), which govern the eligibility, operations and compliance of all participants.
• Develop and maintain core infrastructure - smart contracts, APIs and SDKs to enable seamless payment settlement (send/receive transactions) across blockchain networks.
• Operates a coordination protocol for member and price discovery, payment routing and settlement between counterparties.
• Facilitate standardised and automated information sharing among members to ensure compliance with the Travel Rule.
• Verify the qualifications of financial institutions, approve their participation in the network, and issue certificates confirming compliance with CPN standards related to licensing, anti-money laundering and counter-terrorism financing (AML/CFT), sanctions compliance, and financial strength.
• Monitor members’ compliance with regulatory requirements, including AML/CFT and sanctions, through ongoing risk-based reviews.
• Plan and manage cybersecurity, incident response, and infrastructure to ensure operational integrity and resiliency.
• Introduce pre-vetted third-party service providers and modular applications that meet CPN compliance, security and performance standards.

5.2 CPN Members

Members, also known as Participating Financial Institutions (PFIs) , are the backbone of the CPN. They act as counterparties, initiate, facilitate or receive payments in the network, and execute transactions in accordance with CPN rules and governance standards.

PFIs include virtual asset service providers (VASPs), traditional and crypto-native payment service providers (PSPs), and financial institutions such as traditional or digital banks. Depending on their role in the transaction, PFIs may act as originating financial institutions (OFIs), initiating payments on behalf of the sender; or as beneficiary financial institutions (BFIs), receiving stablecoin payments and facilitating the last mile fiat payment through local payment systems, or providing stablecoin custody services on behalf of the receiver.

The core responsibilities of CPN members include:

• Maintain appropriate licensing and ensure ongoing compliance with applicable regulations in all relevant jurisdictions, including Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) and sanctions requirements, while adhering to the CPN Rules.
• Participate in Circle’s qualification process and maintain up-to-date verification of legal entity information, compliance status, jurisdictional coverage and risk profile.
• In accordance with its compliance obligations, it uses the information collected and oversight performed through the CPN to conduct risk-based assessments of counterparties and transactions.
• Depending on its role as an OFI or BFI, payments are executed through a range of technical services and protocols detailed in the CPN Rules.
• Comply with CPN's technical and infrastructure requirements, including security integration, service level agreement (SLA) performance, transaction monitoring, and data protection agreements.
• Share necessary originator and beneficiary information as required by CPN’s Travel Rule compliance framework, Requests for Information (RFIs), and other oversight requests.
• Monitor transactions to detect and report suspicious activity in accordance with applicable regulations.
• Participate in CPN governance through structured feedback, operational reviews, and member reputation scoring to enhance transparency and support continuous improvement.
• Provide timely support and resolution to inquiries from other members or end users regarding the network.
• Develop and deliver innovative payment use cases using CPN’s developer SDK, regulated stablecoins, and smart contract infrastructure.

5.3 CPN End Users (Enterprises and Individuals)

End users are the ultimate initiators and beneficiaries of payment transactions - although they do not interact directly with CPN, they benefit from lower costs, faster settlement, greater transparency, and continuous innovation.Senders initiate payments through an originating financial institution (OFI), while beneficiaries receive payments through a beneficiary financial institution (BFI).

5.4 CPN Service Provider

These entities include financial institutions (FIs) and non-financial institutions (non-FIs) that provide value-added technology solutions and financial services to CPN members and end-users.

They include:

• Liquidity Providers and FX Venues : These entities provide efficient market making, price discovery, and currency exchange services for stablecoin transactions within the CPN. They provide liquidity for cross-border stablecoin settlements and ensure competitive foreign exchange rates.
• Stablecoin issuers : These institutions issue regulated payment stablecoins, which are the primary medium of exchange within the CPN. Stablecoin issuers ensure transparent reserves, regulatory compliance, and underlying fiat liquidity to support seamless cross-border transactions.
• Technology Solutions and Financial Services Providers : These service providers provide a range of services to CPN members, including fraud and risk management, wallet infrastructure, custody solutions, billing and invoicing, and compliance and transaction monitoring solutions, to support their business and operational needs.

VI. CPN Governance, Qualification and Network Operation

The CPN operates under a collaborative and transparent governance framework that prioritizes compliance, security, and trust within the network. The framework covers three key aspects of governance:

• Eligibility Review and Oversight : Circle, as the primary governance body, is responsible for establishing strict eligibility criteria, which are detailed in the Circle Payments Network Rules, and promoting the integration of regulated payment stablecoins into the network.
• Network Functions and Operations : Core functions support seamless and compliant transactions while ensuring operational rigor and continuous improvement.
• Transparency and Stakeholder Engagement : By actively engaging with diverse stakeholders, including financial institutions, regulators, businesses, and builders, CPN aligns with global standards to enhance trust, accelerate adoption, and promote sustainable network ecosystem growth.

Network Operations:

• Only legally authorized financial institutions;
• Mandatory Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) and sanctions compliance;
• Secure transaction data sharing, including the Travel Rule;
• Ongoing auditing and monitoring.

6.1 Qualification Review and Supervision

CPN’s governance framework defines eligibility criteria, certification protocols, and the integration of regulated stablecoins to ensure trusted participation in the network by financial institutions, regulated stablecoin issuers, and service providers, among others.

A. Strict eligibility criteria

Members must meet comprehensive eligibility requirements before being granted access to the network. This includes holding all necessary licenses, implementing sanctions and anti-money laundering (AML) programs consistent with local regulations and global norms, maintaining reasonable security controls, and demonstrating adequate financial strength. As the network operator, Circle assesses all potential members before granting access and reassesses them regularly based on risk. Members licensed under a robust regulatory regime established by international compliance standard-setting bodies, such as the Financial Action Task Force (FATF), are reviewed for standards, while others are subject to more in-depth assessments. The eligibility criteria are published, and Circle’s assessments can also serve as input to members’ own counterparty due diligence processes.

B. Member Authentication and Access

Upon successful completion of qualification verification and approval, CPN issues unique network certifications to qualified members. These certifications enable counterparties to identify each other and retrieve counterparty information in a secure manner, promoting transparency, facilitating informed risk assessments, and increasing the efficiency of counterparty due diligence. The certification consists of a set of clearly defined attributes - including membership status, jurisdictional coverage, and eligibility information - which are continuously monitored and updated to reflect changes in the risk landscape.

C. Integration of Regulated Payment Stablecoins

The CPN's governance framework outlines a structured evaluation and approval process for integrating new regulated payment stablecoins into the CPN. Potential stablecoins must undergo a rigorous assessment based on the CPN's strict eligibility criteria, including regulatory compliance, transparent reserves and audit proofs, availability of bank payment channels, underlying fiat liquidity, risk management standards, information and network security capabilities, and reporting practices. Only stablecoins that fully meet these standards and are approved by the governance body can operate within the network, ensuring that they contribute to a stable, secure and efficient network ecosystem.

6.2 Network Functions and Operations

CPN enables members to conduct secure, real-time transactions through a robust operational framework that ensures consistency, scalability and resiliency. The framework includes transaction coordination, operational support, incident response and infrastructure management.

A. Transaction coordination and risk management

Transactions within the CPN are coordinated through a series of technical services and protocols to ensure seamless execution between participating members. In addition, network members use the automatic alerts provided by the CPN and regular risk assessments to continuously monitor transaction flows, focusing on transaction anomalies and partner performance, such as assessing failed transaction rates and service level agreement (SLA) violations. Together, these measures proactively mitigate operational risks and help maintain the reliability and efficiency of the network.

B. Member Operational Support

The CPN provides clear operational guidelines, including a service level agreement (SLA) defined in the CPN Rules, covering expectations for uptime, transaction speed, dispute resolution and timely information sharing. The network also standardizes the exchange of transaction and counterparty data, streamlining operations by reducing the need for customized coordination.

C. Incident and crisis management

CPN has detailed protocols in place for managing security incidents, regulatory compliance issues and system downtime. These protocols include pre-defined communication channels with members and a transparent and impartial resolution process, ensuring prompt action and effective management of disputes, whether involving compliance or trading issues.

D. Infrastructure Scalability and Planning

CPN’s infrastructure is continuously monitored through observability tools that track throughput, latency, and error rates. Automated performance monitoring and regular load testing enable the network to scale with demand. Circle works with vetted infrastructure and cloud partners to ensure the provisioning of elastic compute and storage resources. Scalability reviews and corridor-level stress testing validate the network’s readiness for increased transaction volumes and network expansion.

6.3 Transparency and stakeholder engagement

CPN’s governance is built on transparency, which helps build trust and confidence among all participants. Circle, as the governing body, takes strategic advice to strengthen the governance framework, with the advice of the Advisory Committee. CPN regularly conducts surveys, focus groups, and structured reviews to collect member feedback and assess service quality. These inputs drive continuous improvement and help ensure that the network evolves to meet the needs of participants. Independent audits and regular public reporting of transaction volumes, system uptime, and member compliance further strengthen the integrity and accountability of operations.

Representation of CPN members and end users, as well as engagement with regulators, plays a vital role in the development of the network. CPN members are encouraged to actively participate in the development of the network’s rules and technical standards by providing advice and operational insights that help shape the network’s strategy and growth. In addition, Circle’s Financial Services division has a strong track record of ongoing engagement with global regulators, which can be leveraged to ensure that the CPN is aligned with international standards – particularly international Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) and the Financial Action Task Force (FATF) Travel Rule standards – and operates in a secure, trusted and compliant environment.

VII. CPN Core Services

As a coordination protocol designed specifically for stablecoins, CPN enables seamless, compliant and programmable global transactions.

CPN leverages public blockchain networks for final settlement while optimizing payment coordination, compliance-related data exchange, and smart routing between payment stablecoins and network members. Stablecoins are the foundational digital asset class within CPN, providing the stability, interoperability, and programmability required for high-trust financial applications.

At launch, the network supports USDC and EURC, with plans to expand to other regulated payment stablecoins that meet CPN's strict governance and eligibility criteria. Over time, CPN will serve as a foundation for builders to develop interoperable modules and application services that will expand the network's utility and unlock new use cases for global payments and financial innovation.

7.1 Payment through intelligent coordination

CPN's payment protocol is built on a hybrid architecture that combines off-chain and on-chain systems to help aggregate liquidity and facilitate price discovery among network members. As more payment stablecoins join the network, CPN will evolve into an on-chain foreign exchange routing infrastructure , enabling efficient and instantaneous exchange between stablecoins, while still coordinating transaction settlement between originating financial institutions (OFIs) and beneficiary financial institutions (BFIs).

In the initial version of CPN, coordination occurs through an off-chain API system that generates transaction requests. OFIs sign these requests to initiate USDC or EURC transfers to designated BFI wallets. At this stage, Circle (as the network operator and governance body) broadcasts the transaction to the appropriate blockchain. This process verifies the payment details, ensuring that the correct amount and tokens are delivered to the BFI and that all associated fees are covered within the agreed settlement time.

Subsequently, CPN will transition to a smart contract protocol architecture, enhancing the composability of the network and introducing more efficient, value-added features. The CPN Smart Contract Payment Protocol is designed to enable seamless on-chain payments between members using stablecoins, including USDC and EURC. By leveraging smart contracts, the protocol will enable transactions with minimal risk of errors, automatic reconciliation, and efficient fee collection, while maintaining a non-custodial design.

Under the protocol, OFIs initiate payments through smart contracts deployed on public blockchain networks powered by CPN. The contract verifies key transaction parameters (such as token type, amount, recipient address, and deadline) before executing payments. Unlike traditional transfers that are prone to errors and require separate invoicing of transaction fees, smart contracts enforce precise payments and efficiently route transactions to different BFIs in situations involving multiple bids and offers.

To enhance transparency and security, each transaction is uniquely identified and timestamped, ensuring clear auditability for compliance and reconciliation purposes. In addition, the protocol will include an optional "revoke" function in the future, allowing the sender to cancel an erroneous transaction within a short window before final confirmation.

7.2 Optimizing Foreign Exchange (FX) through Intelligent Discovery and Routing

The CPN enables participating originating financial institutions (OFIs) to discover beneficiary financial institutions (BFIs) and send stablecoins for payment settlement. During the discovery process, the CPN allows OFIs to query the network for specific stablecoins or fiat currency pairs. The system allows OFIs to discover network participants and request corresponding exchange rates and liquidity. Initially, the platform will integrate USDC and EURC with local fiat liquidity order books and private liquidity sources. Over time, the system will transition to a fully on-chain foreign exchange (FX) routing, aggregation and settlement architecture - providing direct access to on-chain FX pools, order books and private liquidity. The network's discovery capabilities will include order routing, while the Request-for-Quote (RFQ) system will further optimize FX execution to meet the performance standards of traditional payment systems.

While the network is initially focused on discovering liquidity between BFIs, it will gradually expand to include whitelisted on-chain venues — such as automated market makers (AMMs), on-chain order books, and other liquidity providers — to expand access to stablecoin liquidity. Once discovered, CPN will intelligently match orders from these sources, enabling direct stablecoin foreign exchange conversions with built-in security measures and transparent execution, coordinated by Circle as the network operator.

7.3 Seamless cross-chain settlement and payment

CPN supports native settlement of stablecoins on multiple blockchains, providing a seamless cross-chain payment transfer mechanism. Participating Financial Institutions (PFIs) bring their preferred blockchains to the network, and CPN coordinates transactions between the selected source and target blockchains for efficient payment settlement. With Circle's Cross-Chain Transfer Protocol (CCTP Version 2), CPN provides fast and secure cross-chain transfers for permitted stablecoins, ensuring that transactions maintain speed and integrity in the blockchain network. Initially, the platform will support a limited number of blockchains at launch, and will expand to more blockchains in the future based on the preferences of network members.

7.4 Protecting confidentiality through selective transparency

CPN will introduce advanced confidentiality enhancements on public blockchains to protect transaction data and help members meet their privacy and operational obligations. These mechanisms allow users to designate certain transactions as confidential, ensuring that sensitive payment information is not permanently displayed on the public blockchain. This capability supports a wide range of use cases, enabling companies to maintain confidentiality for critical activities such as corporate payments, trade finance, and payroll through CPN.

In addition, CPN will adopt a confidentiality agreement (which will be defined separately and not included in this white paper) to enable selective disclosure, pursuant to which transaction details will only be visible to authorized parties (including counterparties, law enforcement agencies, regulators and auditors) when required for compliance or legal purposes.

7.5 Expanding Capabilities through Composability and Trusted Interoperability

To extend the value of the network ecosystem, CPN allows pre-vetted third-party protocols to integrate and interoperate with its core infrastructure, enhancing the utility and versatility of its payment capabilities. Circle envisions a diverse range of integrations - including protocols for lending and credit, liquidity aggregation, institutional yield, custody, subscription services, and more. Participation is limited to protocols that have been whitelisted, audited, and rigorously reviewed by Circle and that meet strict regulatory compliance, security, and liquidity management standards. Through this composable architecture, CPN aims to unlock a secure, programmable foundation and third-party ecosystem for global payments, financial services, and technology-driven solutions.

8. CPN Economic Model

CPN's economic model and incentives are designed to drive early and rapid adoption while building a sustainable long-term revenue strategy for all network members. It aligns incentives between all network members, end users, builders, and service providers to promote network growth and sustainability.

There are three main fees associated with transactions processed through the CPN:

1. Payout Fees : Compensation to beneficiary financial institutions (BFIs) for the costs of making and processing local fiat payments.
2. FX Spreads : reflects liquidity risk and currency conversion costs.
3. CPN Network Fee : A tiered variable basis point charge based on country groupings to support the core functions of the network, including compliance, security, infrastructure and development.

As the CPN grows and Circle and third-party developers introduce new value-added services through select marketplaces, additional usage-based fees will be implemented to support and sustain these services. These services may include fraud detection tools, risk management, wallet infrastructure, custody, billing and advanced compliance capabilities, among others. First-party (1P) and third-party (3P) service fees will create revenue opportunities for providers and enable financial institutions to customize the payment experience through modular, plug-and-play solutions.

A portion of network and market fees will be strategically reinvested in core priorities such as infrastructure upgrades, R&D, network operations, user acquisition incentives, and developer ecosystem growth - including funding for CPN integrations and new applications. This reinvestment approach is designed to enhance the resiliency of the platform, drive innovation, and accelerate long-term network expansion.

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