Stablecoin issuer Circle Internet Corp. (CRCL.US) and blockchain infrastructure provider Paxos Trust Co. have piloted a new approach to prevent counterfeiting and help businesses verify their digital asset holdings. The two companies collaborated with fintech startup Bluprynt on this initiative.

The pilot project utilizes cryptographic and blockchain technology to provide issuer verification when companies issue stablecoins. According to a statement, this pilot offers tokens a way to trace back to verified issuers through Bluprynt's technology platform.

Bluprynt founder Chris Brummer stated that the company's technology can "provide proof of origin at the front end, reduce complexity, and deliver the transparency needed by regulators and investors." He noted that this helps reduce losses caused by counterfeit tokens and impersonation attacks.

This represents another sign that parts of the digital asset industry are maturing as they work to meet new regulatory requirements established by jurisdictions worldwide. Stablecoins are digital assets pegged to non-volatile assets such as the U.S. dollar and can serve as cash equivalents in payments.

Chris Brummer indicated that the technology could benefit auditors, financial crime investigators, and investors. Blockchain analytics firm Chainalysis Inc. pointed out that security risks facing stablecoins vary depending on how they are issued and managed. The company noted in a June report that impersonation and counterfeit stablecoins are common risks.

Circle Internet Corp.'s USDC is the second-largest stablecoin by market capitalization, while Paxos issues and operates the blockchain infrastructure supporting PayPal (PYPL.US) stablecoin PYUSD. With the recent passage of the GENIUS Act providing a framework for USD-backed stablecoins, more companies are expected to enter the stablecoin issuance space.