PANews April 18th, as reported by Cryptoslate, Circle announced the launch of the Refund Protocol, introducing a non-custodial smart contract system that enables dispute resolution for stablecoin transactions without relying on centralized intermediaries. This initiative aims to address a key flaw in using stablecoins: the lack of a built-in refund or chargeback mechanism. The Refund Protocol grants specific permissions to payment arbitrators while limiting their ability to control funds.

Arbitrators can lock funds for a certain period, authorize refunds to a pre-defined address of the payer, and allow early withdrawal after negotiating fees. However, arbitrators are prohibited from transferring funds arbitrarily, maintaining the non-custodial nature of the system. The company acknowledges that currently, the custodial assets do not generate yields, but suggests future upgrades could integrate lending protocols like Aave, tokenizing locked funds and potentially sharing profits between recipients and arbitrators.