Circle Launches Arc Blockchain for Stablecoin Payments and Institutional Use

Circle, the issuer of the USDC stablecoin, has launched Arc, a new Layer-1 blockchain specifically designed for stablecoin finance and cross-border payments. Built on an EVM-compatible architecture, Arc enables developers to deploy applications using familiar Ethereum tools while offering sub-second transaction finality and low-cost settlements. The blockchain is optimized for high throughput—up to 3,000 transactions per second with 20 validators or 10,000 transactions per second with just four validators—making it suitable for institutional-grade financial services [1].

A key innovation of Arc is its native use of USDC for gas payments, which eliminates the need for volatile cryptocurrencies and ensures predictable costs for users and businesses. The blockchain also features a built-in foreign exchange engine that enables real-time price discovery and 24-hour settlement of stablecoins, supporting cross-border transactions without the high fees typically associated with traditional systems like SWIFT. Privacy is also a focus, with optional features allowing transaction amounts to be hidden while keeping addresses visible—ensuring compliance and user control [2].

Arc is built on a custom consensus mechanism known as Malachite, developed by Informal Systems, which Circle recently acquired. The software will be open-sourced, encouraging collaboration from the developer community. A private testnet is expected to launch in the coming weeks, with public testing beginning in the fall of 2025. The full mainnet rollout is scheduled for 2026 [3].

The new blockchain is intended to integrate with Circle’s existing infrastructure, including the recently launched Circle Payments Network, which already connects financial institutions across four corridors. More than 100 institutions are reportedly preparing to join the network, signaling a broader push to bring USDC into institutional financial systems. This integration is expected to expand the utility of stablecoins beyond peer-to-peer transactions and into more complex financial use cases such as tokenized asset settlement [4].

Circle’s recent financial performance shows a mixed picture. In Q2 2025, the company reported $658 million in revenue, a 53% year-over-year increase. USDC circulation reached $65.2 billion by mid-August 2025, up from $61.3 billion in June. However, the company also reported a net loss of $482 million in Q2 2025, largely attributed to non-cash charges from its IPO in June [5].

Some industry observers have raised questions about the necessity of a blockchain dedicated solely to stablecoins, particularly in the absence of DeFi applications or broader token support. Others have pointed to the centralized nature of Arc’s validator structure, which resembles a consortium chain rather than a fully decentralized network [6].

Circle, however, maintains that Arc is designed to solve specific enterprise challenges, including high gas fees, unpredictable costs, and privacy requirements. If successful, the platform could accelerate the adoption of stablecoin-based global payments, particularly in cross-border and institutional markets. USDC already facilitates trillions in annual transactions, and a dedicated blockchain like Arc may enable the next phase of growth for stablecoin-driven finance [7].

With regulatory developments like the GENIUS Act supporting blockchain innovation, Circle’s move positions it as a leader in the evolution of digital payment infrastructure. Arc represents a strategic bet that specialized, purpose-built blockchains will drive mainstream adoption of digital dollars [8].

Source:

[1] Introducing Arc: An Open Layer-1 Blockchain Purpose-Built ... (https://www.circle.com/blog/introducing-arc-an-open-layer-1-blockchain-purpose-built-for-stablecoin-finance)

[2] Circle Unveils Arc: Dedicated Blockchain for Stablecoin ... (https://bravenewcoin.com/insights/circle-unveils-arc-dedicated-blockchain-for-stablecoin-finance)

[3] Circle Launches Arc Blockchain to Power Global ... (https://blockonomi.com/circle-launches-arc-blockchain-to-power-global-stablecoin-transactions/)

[4] Circle Unveils Arc, Its EVM-Compatible L1 Blockchain (https://www.bankless.com/read/circle-unveils-arc-its-evm-compatible-l1)

[5] Circle Unveils Arc, Reports $428 Million Q2 Loss (https://www.coindesk.com/business/2025/08/12/circle-unveils-layer-1-blockchain-arc-reports-usd428-million-q2-loss)

[7] Circle Launches Arc Blockchain to Boost Stablecoin ... (https://www.ainvest.com/news/circle-launches-arc-blockchain-boost-stablecoin-transactions-cross-border-payments-2508/)

[8] Stablecoin Giant Circle Launches Arc for Cross-Border Flows (https://www.digitaltransactions.net/stablecoin-giant-circle-launches-arc-for-cross-border-flows/)