Ethereum News Today: Circle Launches Arc Blockchain to Power USDC-Based Finance With Sub-Second Settlements

Circle, the stablecoin giant behind USDC, has announced the launch of Arc, an EVM-compatible Layer-1 blockchain designed specifically for stablecoin finance. Arc positions USDC as its native gas token, offering predictable, dollar-denominated fees and aiming for sub-second settlement speeds. The new blockchain includes enterprise-grade features such as a built-in FX engine for stablecoin pairs, deterministic finality via a high-performance consensus mechanism called Malachite, and opt-in privacy options to meet compliance standards [1].

This move represents a significant shift for Circle. Previously operating as an issuer on other blockchain networks, Circle is now building its own infrastructure, aiming to provide a dedicated platform for stablecoin-based payments, foreign exchange, and capital market applications. Arc’s roadmap includes a private testnet in the coming weeks, a public testnet by late 2025, and a mainnet beta in 2026 [1].

The timing of Arc’s launch aligns with two major trends in the crypto space. First, regulatory clarity—especially in the U.S.—is increasing, with developments like the proposed GENIUS Act encouraging both established players and newcomers to build compliant, institutional-grade infrastructure. Second, stablecoin issuers are moving “down the stack,” seeking greater control over the base layer. Tether, for example, has also announced plans for a zero-fee blockchain called Plasma, indicating a broader industry trend [1].

Arc’s launch raises questions about the future of Ethereum, particularly as a home to stablecoin activity. If stablecoin flows—particularly those involving USDC—shift to Arc, Ethereum could lose a portion of its transaction volume, fee revenue, and narrative dominance. With ETH near a four-year high and close to its 2021 peak, these concerns are amplified. However, a more nuanced view suggests the impact may be mixed. While Arc could draw activity away from Ethereum, its EVM compatibility and multichain interoperability—via tools like CCTP and bridges—could also reinforce Ethereum’s role as a hub for deeper liquidity and DeFi [1].

What sets Arc apart is its focus on solving real-world problems for enterprises. By using USDC as gas, it eliminates the volatility and unpredictability of traditional blockchain fees. Its integrated FX engine supports PvP (peer-to-peer) settlement for USDx/EURx pairs, aiming to streamline treasury operations and cross-border payments. The deterministic finality of the Malachite consensus mechanism offers a fast, reliable experience, comparable to traditional card transactions [1].

Circle envisions Arc as a platform where USDC’s widespread adoption can be leveraged into broader financial infrastructure, including programmable commerce and RWA (real-world asset) settlement. If successful, the company can generate revenue not only from stablecoin issuance but also from gas fees and infrastructure services—a significant evolution from its initial model [1].

Key indicators to monitor include the public testnet’s performance, especially in terms of latency and throughput compared to competitors like Solana, Tron, and Ethereum/L2s. Payment pilot programs using USDC gas and paymaster flows will also be crucial in demonstrating Arc’s usability in real-world scenarios. Additionally, how Tether’s Plasma and other projects respond will shape the competitive landscape [1].

In conclusion, Arc is not positioned as a direct rival to Ethereum but rather as a complementary infrastructure for stablecoin finance. If Circle’s vision materializes, Arc could address long-standing challenges such as volatile gas fees, complex FX processes, and privacy concerns. Meanwhile, Ethereum is likely to retain its significance as a settlement layer and liquidity hub, even as some transactions migrate to Arc. In a regulated, stablecoin-centric future, the coexistence of these platforms may represent the new equilibrium [1].

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[1] Circle’s Arc: When a Stablecoin Becomes the Chain Is Ethereum Losing Its Star Tenant? (https://coinmarketcap.com/community/articles/689c44cd0023947b43616f33/)