By Jason Nelson
8 min read
Circle, the company behind the USDC stablecoin, launched a blockchain platform called Arc, which opened to the public on September 16, 2026. Unlike blockchains like Ethereum or Solana, Arc is a layer-1 network designed specifically to support stablecoin-based applications.
Stablecoins are tokens whose value is tied to fiat currencies such as the dollar. Arc is Circle's effort to address the infrastructure challenges that limit the adoption of stablecoins at an institutional scale.
"We've helped enterprises and builders use USDC across dozens of networks," Rachel Mayer, VP of Product Management at Circle, told Decrypt. "The consistent feedback has been: make costs predictable, settlement finality deterministic, and privacy compatible with real-world obligations."
This article will explain what Arc is, how it works, and what Circle says sets it apart from other blockchain platforms.
While a part of the crypto market for years, stablecoins like USDT and USDC have seen growing interest and adoption following the passage of the GENIUS Act, which U.S. President Donald Trump signed into law in July 2025.
However, Circle argues that most existing blockchains were not designed to support stablecoins. Common limitations that Circle points to include:
Circle said Arc addresses these challenges by offering instant and irreversible transaction settlement (known as deterministic finality), predictable fees priced in stablecoins, optional privacy features that support regulatory compliance, and built-in connections to other blockchains and traditional financial systems.
Arc's public testnet launched in October 2025 and processed more than 700 million transactions in under a year, according to Circle. More than 100 institutional and ecosystem partners were on the network on its first day of public operation. Chief executive Jeremy Allaire called it "the single most significant launch in Circle's history since USDC itself," in a press release.
By using USDC, a digital currency backed by real-world assets, Circle aims to eliminate the need for volatile tokens to pay transaction fees. The network can also support other stablecoins as gas via a paymaster system. USDC had around $74 billion in circulation in September 2026.
According to Circle, Arc's fee model builds on Ethereum's EIP-1559 architecture but replaces block-level adjustments with a weighted moving average of network demand. This smoothing mechanism keeps fees low and predictable. Fees are denominated in USDC and directed to an on-chain Arc Treasury.
"Arc's fast finality and native gas coupled with Circle's CCTP and Gateway interoperability service-as-a-stablecoin liquidity hub, enable USDC to move across the blockchain ecosystem freely," Mayer said. "So builders and users can be on the networks that fit their needs while still tapping Arc's stablecoin-optimized rails."
This design enables dollar-based, auditable, and stable fee structures, which Circle said are better suited to financial institutions than speculative token models.
Arc's consensus layer is powered by Malachite, a Byzantine Fault Tolerant (BFT) engine based on Tendermint. Validator selection is permissioned and based on operational resilience, geographic distribution, and regulatory compliance. The network runs on proof of authority, with a possible transition to Proof-of-Stake in 2027, according to Circle.
BlackRock, DTCC, Galaxy, ICE, Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo Corporation, Visa and Worldpay, now part of Global Payments, run validators alongside Circle itself. Circle presents Arc's permissioned model as a selling point, pairing it with governance limits it says allow banks to use a public chain for treasury, trading and confidential payments.
To reduce the chance for abuse, Circle is developing tools like encrypted mempools, batch transaction processing, and multi-proposer consensus, all aimed at ensuring fairer execution in financial applications.
Aave and Morpho anchor lending on Arc, while Uniswap, Aero and fomo handle trading. Binance, Kraken, Bybit and OKX offer routes onto the network, with Coinbase to follow, and Chainlink, Fireblocks, Ledger, MetaMask and Upbit provide access and infrastructure. Rain, Thunes and Wirex cover payments.
BNY, HSBC, Societe Generale and State Street are among the banks with access. BlackRock's BUIDL tokenized money market fund and Circle's USYC supply tokenized collateral. DTCC will enable tokenization of assets held in its custody on the network, though not until the second half of 2027.
Arc also ships with tooling for AI agents that transact independently, including agent wallets, spending limits and nanopayments. Circle, citing Dune data, said USDC accounts for 98.8% of agent-driven transaction volume.
Circle published the Arc white paper in May 2026, outlining the ARC native token's role as the "coordination mechanism" of the Arc network as it transitions to a proof-of-stake consensus model.
Under this model, a "permissioned" set of validators produces blocks and maintains the network, with rewards from inflation-funded issuance and fee-derived revenue converted into ARC.
With the Arc network designed as a "holistic platform that will expand over time," ARC's role will likewise expand as "new capabilities emerge" 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 crosschain transfer operations and stablecoin minting.
The initial supply of ARC tokens is 10 billion, with issuance of new tokens expected to begin at an annual rate of 2–3%. The long-term objective is "inflation neutrality," according to the white paper, with the exact timeline dependent on network growth.
Of the initial ARC token supply, 60% is allocated to the ecosystem, to fund developer grants, token sales and other participation mechanisms. 25% is allocated to Circle, while 15% will go to a long-term reserve, acting as a buffer against "unforeseen conditions."
Circle completed the genesis mint in September 2026, creating all 10 billion ARC tokens, and said the mint made it the first publicly traded company to mint a network token for a new layer-1. The mint "is not a commitment to publicly launch ARC," the company said, describing it as a technical step toward the possible move to proof of stake.
The token has also begun to show up in Circle's accounts. Reporting second-quarter results in August 2026, the company roughly doubled its full-year guidance for other revenue to between $310 million and $330 million, from $150 million to $170 million, attributing part of the increase to recognized revenue from the ARC token presale.
Arc includes a modular privacy system designed to balance compliance with confidentiality. The first feature, confidential transfers, shields transaction amounts while keeping addresses visible. Smart contracts interact with a cryptographic backend via precompiles, using Trusted Execution Environments (TEEs) for private computation.
Institutions can selectively disclose data to regulators or auditors via view keys. Over time, Arc plans to support:
The network also supports optional post-quantum signatures, with broader protections against quantum attacks in development.
Circle's tools connect fiat and USDC across Arc and other blockchains: Mint converts fiat to USDC on Arc, CCTP transfers USDC by burning and reminting it across chains, and Gateway offers chain-agnostic USDC balances with built-in liquidity rebalancing for wallets and apps.
"Arc strengthens the broader multichain ecosystem by unlocking new use cases, partners, and institutional liquidity on-chain," Mayer said. "Builders and users can be on the networks that fit their needs while still tapping Arc's stablecoin-optimized rails."
Arc enters a competitive environment that includes public Layer-1 blockchains such as Bitcoin, Ethereum, and Solana, stablecoin-focused chains like Plasma and Frontier, Layer-2 networks such as Arbitrum and Base, and private or semi-public networks operated by payments firms.
Circle's differentiator is its existing position in the market as the issuer of USDC, one of the largest stablecoins, and the roster of financial institutions it has signed up to operate the network.
In May 2026, Circle announced a $222 million token presale for ARC, with the token achieving a $3 billion fully diluted valuation. The raise was led by VC firm Andreessen Horowitz with a $75 million investment, with other participants including BlackRock and Apollo Funds.
By building a purpose-specific chain for programmable, compliant financial operations, Arc aims to extend the utility of stablecoins beyond payments and into real-time settlement, tokenization, and global capital.
"Regulatory clarity is often a catalyst for institutional adoption," Mayer said, adding that Arc is designed to be "enterprise-grade."
Editor's note: This story was originally published on September 20, 2025, and last updated with details of the mainnet launch on September 17, 2026.
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