Circle, the company behind the USDC stablecoin, has introduced Arc, a new Layer 1 blockchain built specifically for stablecoin-based applications. Unlike general-purpose chains such as Ethereum and Solana, Arc is being positioned as infrastructure for programmable financial activity, with Circle arguing that existing networks were not designed around institutional stablecoin use.
Rachel Mayer, Circle’s VP of Product Management, told Decrypt that the company had heard a consistent message from enterprises and builders using USDC across dozens of networks: they wanted predictable costs, deterministic settlement finality, and privacy features that can work with real-world compliance requirements.
Why Circle built Arc
Stablecoins have been part of the crypto market for years, but Circle said interest and adoption have risen after President Donald Trump signed the GENIUS Act into law in July 2025. Even so, the company says most blockchains still fall short for large-scale stablecoin deployment.
Circle points to four recurring limits in today’s market:
- Fee volatility
- Probabilistic settlement, including the risk of chain reorganizations
- A lack of privacy controls for sensitive commercial transactions
- Liquidity fragmentation across multiple chains
Arc is Circle’s answer to those issues. The company says the network offers instant and irreversible settlement, or deterministic finality, predictable fees priced in stablecoins, optional privacy features built with regulatory compatibility in mind, and native links to other blockchains as well as traditional financial systems.
Arc’s public testnet went live in October 2025. Circle plans to open the network’s public mainnet on September 16, 2026. For now, Arc is in a private mainnet phase with more than 100 ecosystem and institutional builders. In August 2026, Circle CEO Jeremy Allaire said the testnet had handled more than half a billion transactions across nearly 3 million wallets.
USDC as native gas
Arc uses USDC as its native gas asset. Circle says that design removes the need for a volatile token to pay network fees. Other stablecoins can also be used for gas through a paymaster system.
According to Circle, Arc’s fee model is based on Ethereum’s EIP-1559 architecture, but replaces block-level fee adjustments with a weighted moving average tied to network demand. The company says that smoothing mechanism is intended to keep fees low and predictable. Fees are denominated in USDC and sent to an on-chain Arc Treasury.
Mayer said Arc’s fast finality and native gas, combined with Circle’s CCTP and Gateway interoperability services and its stablecoin liquidity hub design, allow USDC to move freely across the blockchain ecosystem. Builders and users, she said, can remain on the networks that best fit their needs while still using Arc’s stablecoin-optimized rails.
Circle argues that the result is a dollar-based, auditable, and stable fee structure that fits financial institutions better than speculative token models.
Deterministic settlement and consensus
Arc’s consensus layer runs on Malachite, a Byzantine Fault Tolerant engine based on Tendermint. Validator selection is currently permissioned and based on operational resilience, geographic distribution, and regulatory compliance. Circle says the network is expected to move toward a permissioned proof-of-stake model.
In August 2026, the company named the founding validator cohort that will secure Arc at launch. BlackRock, DTCC, Galaxy, Global Payments, ICE, Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo Corporation, and Visa will operate validators alongside Circle.
Circle is also building encrypted mempools, batch transaction processing, and multi-proposer consensus tools. The company says those measures are meant to reduce the chance of abuse and support fairer execution in financial applications.
What will run on Arc at launch
Circle has identified several projects and service providers expected to be present on Arc from day one. On the DeFi side, that list includes Aave, Morpho, and Uniswap. Access and infrastructure partners include Binance Wallet, Chainlink, Fireblocks, Kraken, Ledger, MetaMask, and Upbit. Payments coverage is expected from Rain, Thunes, and Wirex.
BlackRock is expected to deploy BUIDL, its tokenized money market fund, on Arc. DTCC plans to enable tokenization of assets held in its custody on the network, though that step is not expected until the second half of 2027.
The role of the ARC token
Circle published the Arc white paper in May 2026 and described the ARC native token as the network’s “coordination mechanism” as Arc transitions toward a proof-of-stake consensus design.
Under that structure, a permissioned validator set would produce blocks and maintain the network. Rewards would come from inflation-funded issuance as well as fee-derived revenue converted into ARC.
The white paper says Arc is designed as a holistic platform that will expand over time, and that ARC’s role is expected to broaden as new capabilities appear in each layer of the stack, including applications, developer kits such as agentic SDKs, and protocol services.
ARC stakers may receive discounted transaction rates and preferential access from ecosystem partners, including Circle’s cross-chain transfer operations and stablecoin minting.
The token’s initial supply will be 10 billion. New issuance is expected to begin at an annual rate of 2% to 3%. The white paper says the long-term goal is inflation neutrality, with the exact timing dependent on network growth.
Of the initial supply, 60% is allocated to the ecosystem for developer grants, token sales, and other participation mechanisms. Circle is allocated 25%, while 15% goes to a long-term reserve intended to act as a buffer against unforeseen conditions.
ARC has also started appearing in Circle’s financials. Reporting second-quarter results in August 2026, the company raised its full-year guidance for other revenue to $310 million-$330 million from $150 million-$170 million, and said part of that increase came from recognized revenue tied to the ARC token presale.
Opt-in privacy for institutions
Arc includes a modular privacy system built to balance confidentiality with compliance. Its first feature, confidential transfers, hides transaction amounts while keeping wallet addresses visible. Smart contracts connect with a cryptographic backend through precompiles, and private computation uses Trusted Execution Environments, or TEEs.
Institutions can selectively disclose data to regulators or auditors through view keys. Over time, Circle says Arc is expected to support private state and confidential computation, zero-knowledge proofs, multi-party computation, and fully homomorphic encryption.
Circle’s product stack also connects fiat and USDC across Arc and other blockchains. Mint converts fiat into USDC on Arc. CCTP moves USDC across chains by burning and reminting it. Gateway provides chain-agnostic USDC balances with built-in liquidity rebalancing for wallets and apps.
Mayer said Arc strengthens the broader multichain ecosystem by bringing new use cases, partners, and institutional liquidity on-chain, while letting builders and users stay on the networks that suit them and still access Arc’s stablecoin-focused rails.
Where Arc fits in the market
Arc enters a crowded field that already includes public Layer 1 blockchains such as Bitcoin, Ethereum, and Solana; stablecoin-oriented chains such as Plasma and Frontier; Layer 2 networks including Arbitrum and Base; and private or semi-public systems run by payments firms.
Circle’s main advantage, according to the article, is its current role as the issuer of USDC, one of the largest stablecoins, along with the lineup of financial institutions it has brought in to help operate the network.
In May 2026, Circle announced a $222 million presale for ARC at a $3 billion fully diluted valuation. The round was led by Andreessen Horowitz, which invested $75 million. Other participants included BlackRock and Apollo Funds.
By building a purpose-specific blockchain for programmable and compliant financial operations, Circle says Arc is meant to push stablecoin usage beyond payments and into real-time settlement, tokenization, and global capital flows.
Mayer said regulatory clarity is often a catalyst for institutional adoption, adding that Arc was designed to be “enterprise-grade.”
Editor’s note: Decrypt said the story was originally published on September 20, 2025, and was last updated with new details on August 6, 2026.