The company behind USDC is considering a radical departure from crypto orthodoxy: the possibility of undoing blockchain transactions.

According to Circle president Heath Tarbert, the team is studying ways to let users recover funds lost to scams or hacks, while still keeping the promise of fast settlement.

The concept strikes at the heart of one of crypto’s oldest values — that once a transfer is made, it cannot be changed. Advocates for irreversibility say it keeps power out of centralized hands.

But Tarbert argued that investors also want safeguards, and that traditional finance offers lessons worth borrowing. “Fraud protection is one of the advantages banks have built into their systems,” he said, adding that the challenge is finding a balance without diluting the benefits of blockchain.

This tension is not just theoretical. Earlier this year, the Sui blockchain froze more than $160 million following a $220 million exploit of the Cetus exchange, later returning the funds after a community vote. Some saw that move as a rare win against hackers, while others warned it showed how easily decentralization can be compromised.

Circle’s exploration of reversibility comes as it ramps up efforts to court banks and asset managers. Its new blockchain, Arc, will debut in testnet later this year and launch fully in 2025. Designed as an enterprise-grade settlement layer, Arc will rely on USDC as its gas token and integrate custody through Fireblocks, which already serves over 2,000 financial institutions worldwide.

With stablecoins gaining traction in mainstream markets, Circle’s next steps could set a precedent. Reversible transactions might reassure institutions still wary of crypto’s risks — but at the same time, they could ignite fierce backlash from decentralization purists who view immutability as non-negotiable.