Circle Unveils Arc: A Dedicated Blockchain for Stablecoins

Overview

• Arc is a blockchain developed by Circle, the issuer of USDC, specifically for stablecoin applications.
• The platform utilizes USDC for transaction fees, incorporates a built-in foreign exchange engine, and offers optional privacy features.
• A public mainnet is set to launch on September 16, 2026, alongside the introduction of the ARC token.

Circle, the entity behind the USDC stablecoin, has officially introduced a new blockchain platform known as Arc. In contrast to blockchains such as Ethereum and Solana, Arc is a layer-1 network specifically designed to facilitate stablecoin-centric applications.

Stablecoins are digital tokens that maintain their value in relation to fiat currencies like the US dollar. Arc is Circle's initiative to overcome the infrastructural barriers that hinder the widespread institutional adoption of stablecoins.

Rachel Mayer, VP of Product Management at Circle, shared with Decrypt, "We've supported enterprises and developers in utilizing USDC across multiple networks. The feedback has been clear: we need predictable costs, deterministic settlement, and privacy that aligns with real-world obligations."

This article will delve into the mechanics of Arc, its operational framework, and the unique aspects that Circle claims differentiate it from other blockchain solutions.

The Rationale Behind Arc's Development

Stablecoins, including USDT and USDC, have garnered increased interest following the enactment of the GENIUS Act which was signed into law by President Donald Trump in July 2025.

Circle contends that many existing blockchains are not optimized for stablecoin functionality. Some of the prevalent issues include:

• 🎢 Fluctuating fees
• ⛓️ Uncertain settlement times due to potential chain reorganizations
• 🕵️ Insufficient privacy protections for sensitive commercial transactions
• 💧 Dispersed liquidity across various chains

Arc aims to resolve these challenges by providing instantaneous and irreversible transaction settlement, predictable fees denominated in stablecoins, optional privacy features for regulatory compliance, and seamless connections to other blockchain networks and traditional financial systems.

The public testnet for Arc launched in October 2025, with the public mainnet slated for a September 16, 2026, release. Currently, the network is in a private mainnet phase with over 100 ecosystem and institutional collaborators. Circle CEO Jeremy Allaire noted in August 2026 that the testnet had already managed over half a billion transactions involving nearly 3 million wallets.

Utilizing USDC for Transaction Fees

Circle’s choice to use USDC, a stable digital currency, aims to eliminate the reliance on volatile tokens for transaction fees. The Arc network is also capable of supporting other stablecoins as transaction fees through a paymaster system.

Circle's fee structure builds upon Ethereum’s EIP-1559 model, substituting block-level adjustments with a weighted moving average of network demand to maintain low and predictable fees. These fees are expressed in USDC and allocated to an on-chain Arc Treasury.

“Arc's rapid finality and inherent gas structure, combined with Circle's CCTP and Gateway interoperability service-as-a-stablecoin liquidity hub, allow USDC to navigate the blockchain ecosystem seamlessly,” Mayer remarked. “This enables developers and users to engage with networks that suit their requirements while leveraging Arc’s stablecoin-focused infrastructure.”

This framework fosters dollar-based, transparent, and stable fee structures, which Circle believes are more suitable for financial institutions compared to speculative token systems.

Deterministic Settlement and Consensus Mechanisms

The consensus layer of Arc is powered by Malachite, a Byzantine Fault Tolerant (BFT) engine inspired by Tendermint. Currently, validator selection is permissioned, focusing on operational resilience, geographical distribution, and regulatory adherence. Circle plans to transition to a “permissioned” Proof-of-Stake framework in the future.

In August 2026, Circle announced the initial cohort of validators that will secure the network from its launch, including BlackRock, DTCC, Galaxy, Global Payments, ICE, Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo Corporation, and Visa, along with Circle itself.

To mitigate the risk of misuse, Circle is developing features like encrypted mempools, batch transaction processing, and multi-proposer consensus, all aimed at ensuring equitable execution in financial applications.

Initial Applications on Arc

Expected to be operational from the outset are DeFi protocols such as Aave, Morpho, and Uniswap, with infrastructure support from Binance Wallet, Chainlink, Fireblocks, Kraken, Ledger, MetaMask, and Upbit, alongside payment services from Rain, Thunes, and Wirex.

BlackRock intends to launch its tokenized money market fund, BUIDL, on Arc, while DTCC plans to facilitate asset tokenization on the network, anticipated for the latter half of 2027.

Introduction of the ARC Token

Circle introduced the Arc white paper in May 2026, detailing the role of the ARC native token as the “coordination mechanism” as the network shifts to a proof-of-stake consensus model.

In this model, a “permissioned” group of validators will create blocks and maintain the network, with rewards derived from inflation-based issuance and fee revenues converted into ARC tokens.

As Arc is designed to be a comprehensive platform that will evolve over time, the role of the ARC token will also expand to encompass new functionalities in each layer of the stack, including applications, developer tools like agentic SDKs, and protocol services.

Holders of ARC tokens may benefit from “discounted transaction rates” and “preferential access” through ecosystem partners, including Circle’s crosschain transfer services and stablecoin minting.

The initial supply of ARC tokens will be capped at 10 billion, with new tokens expected to be issued annually at a rate of 2–3%. The long-term goal is to achieve “inflation neutrality,” with the timeline dependent on network expansion.

Of the initial ARC supply, 60% is earmarked for ecosystem development, including funding for developer grants, token sales, and participation initiatives. Circle will receive 25%, while the remaining 15% will serve as a long-term reserve to buffer against unforeseen circumstances.

The token has already begun to appear in Circle's financial reports. In their second-quarter results released in August 2026, the company adjusted its revenue forecast for the year to between $310 million and $330 million, up from a previous estimate of $150 million to $170 million, attributing part of this increase to recognized revenue from the ARC token presale.

Privacy Features for Institutions

Arc incorporates a modular privacy framework designed to balance compliance requirements with confidentiality needs. The initial component, confidential transfers, conceals transaction amounts while keeping addresses visible. Smart contracts interact with a cryptographic backend through precompiles, utilizing Trusted Execution Environments (TEEs) for secure computations.

Institutions can selectively share information with regulators or auditors using view keys. Future enhancements for Arc will include:

• Private state and confidential computations
• Zero-knowledge proofs (ZKPs)
• Multi-party computations (MPC)
• Fully homomorphic encryption (FHE)

Circle’s tools facilitate the integration of fiat and USDC across Arc and other blockchains: Mint converts fiat to USDC on Arc, CCTP transfers USDC through a burn-and-remint process across chains, and Gateway provides chain-agnostic USDC balances with integrated liquidity rebalancing for wallets and applications.

“Arc enhances the broader multichain ecosystem by unlocking new use cases, partnerships, and institutional liquidity on-chain,” Mayer stated. “Developers and users can select networks that meet their needs while still utilizing Arc’s stablecoin-optimized infrastructure.”

Arc's Position in the Blockchain Landscape

Arc enters a competitive landscape that includes public Layer-1 blockchains like Bitcoin, Ethereum, and Solana, stablecoin-centric chains such as Plasma and Frontier, Layer-2 solutions like Arbitrum and Base, and proprietary or semi-public networks run by payment companies.

Circle's competitive edge lies in its established market presence as the issuer of USDC, one of the leading stablecoins, and the array of financial institutions it has enlisted to operate the network.

In May 2026, Circle announced a $222 million token presale for ARC, achieving a fully diluted valuation of $3 billion. The funding round was led by venture capital firm Andreessen Horowitz with a $75 million investment, alongside participation from BlackRock and Apollo Funds.

By creating a blockchain tailored for compliant, programmable financial operations, Arc aims to broaden the application of stablecoins beyond mere transactions to include real-time settlements, asset tokenization, and global capital flows.

“Regulatory clarity often serves as a catalyst for institutional adoption,” Mayer noted, emphasizing that Arc is engineered to be “enterprise-grade.”

Editor's note: This article was first published on September 20, 2025, and has been updated with new information as of August 6, 2026.

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