COTI Breaks Down Exactly Who Can See, and Freeze, Your Stablecoin Payments

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• COTI published a blog post on October 11, 2026 titled “Stablecoin Privacy: Who Can See (and Freeze) Your USDC Payments,” detailing how public and issuer visibility work on major stablecoins
• The post explains that the GENIUS Act, signed into law on July 18, 2025, treats permitted stablecoin issuers as financial institutions required to maintain the technical ability to block, freeze or seize transfers under lawful orders
• COTI surveyed competing privacy approaches, including its own Privacy Portal live on Avalanche since September 16, 2026, alongside Polygon’s shielded USDC and USDT payments and Aleo’s USDCx

COTI published a detailed blog post on October 11, 2026 examining just how exposed stablecoin transactions really are, arguing that payments made in USDC or USDT on Ethereum-style blockchains are close to fully visible to anyone who looks, since the sender, recipient and exact amount of every transfer sit on a public ledger that can be traced indefinitely. The post notes that exchanges routinely link wallet addresses to real identities through know-your-customer processes, meaning the pseudonymous addresses used in day-to-day stablecoin payments often provide far less cover than users might assume.

Beyond public visibility, the post emphasizes that stablecoin issuers themselves retain significant control over the tokens they mint. It points out that Circle’s terms of service, last updated December 12, 2025, reserve the right to block specific addresses from using USDC, while Tether’s terms, updated February 26, 2026, go further by allowing the company to freeze and in some circumstances seize USDT tokens outright. These issuer powers exist independent of whatever privacy tooling a user might layer on top of a transaction, since privacy techniques can hide information from public observers without removing the underlying legal and technical obligations issuers face.

Central to that obligation is the GENIUS Act, the stablecoin framework signed into law on July 18, 2025, which the post says treats permitted issuers as financial institutions under the Bank Secrecy Act. That designation requires issuers to run anti-money-laundering programs, verify customer identities, screen for sanctions violations, and crucially, maintain the technical capability to block or freeze transactions that violate federal or state law, including the ability to comply with lawful court orders or federal agency demands to seize, freeze, burn or otherwise halt transfers. The Act takes effect on the earlier of January 18, 2027, or 120 days after regulators finalize their implementing rules.

The post surveys how different privacy-focused projects are trying to work within those constraints rather than around them. It groups approaches into confidential tokens that hide only transaction amounts, citing COTI itself alongside Zama and a Circle-and-Inco research framework that Circle has stressed is not a product commitment, and shielded transfers that hide both parties and amounts, pointing to Polygon’s private USDC and USDT payments launched May 4, 2026 with screening support from partner Hinkal, and Aleo’s USDCx, which encrypts data by default while still sharing it with counterparties and necessary auditors.

COTI used the piece to detail its own Privacy Portal, live on Avalanche for USDC since announcements dated September 16, 2026, which lets users convert USDC into a private version and back, displaying both a public balance and an encrypted private balance. The post, published on COTI’s blog, acknowledges that deposits and withdrawals through the Portal still appear on-chain with visible amounts, and that the operator retains sanctions screening and wallet-blocking capability, meaning privacy and issuer compliance powers continue to coexist rather than one replacing the other.