Arc is a new open Layer-1 from Circle purpose-built for stablecoin payments, FX and capital-markets use-cases.
USDC will serve as Arc’s native gas token and the chain promises sub-second finality, an on-chain FX engine, and opt-in privacy.
Private testnet begins in the coming weeks; public testnet is expected this fall 2025, with a mainnet beta targeted for 2026.
Circle announced Arc, an open, EVM-compatible Layer-1 designed “from the ground up to serve the next era of stablecoin-native applications,” unveiling the project alongside its Q2 results today. The chain places USDC at the center of settlement mechanics, allowing fees to be paid in dollars rather than volatile tokens — a design aimed at institutional payments and tokenized markets.
Introducing Arc, an open Layer-1 blockchain purpose-built for stablecoin finance.From payments to FX to capital markets, Arc is the home for builders innovating with digital money and tokenized value on the internet.Stablecoins have shown us what’s possible.They’ve powered… pic.twitter.com/N99Kc8UxpG
— Arc (@arc) August 12, 2025
Arc blends enterprise features with public-chain openness: USDC as native gas, a built-in FX/price discovery engine for stablecoin pairs, deterministic sub-second finality powered by the Malachite consensus engine, and opt-in privacy controls for compliance-sensitive workflows. The network will be fully integrated with Circle’s payments rails and developer stack. Informal Systems’ Malachite team has joined Circle to support consensus development.
CRCL quotes by TradingView
Why it matters: Circle reported a sharp increase in USDC circulation (reported at $61.3B at quarter-end, rising to ~$65.2B by Aug. 10), signaling greater demand for dollar-pegged rails — a potential captive market for an L1 optimized for dollar settlement.
Arc’s key features
USDC as native gas: Low, predictable, dollar-denominated fees without relying on volatile crypto assets.
Built-in FX engine: An institutional-grade request-for-quote (RFQ) system for price discovery and 24/7 onchain settlement.
Instant finality: Sub-second deterministic settlement powered by Malachite, Circle’s high-performance consensus engine.
Opt-in privacy: Selectively shielded balances and transactions for compliance with regulatory requirements.
Full Circle platform integration: Native support for Circle’s Payments Network (CPN), USDC, EURC, USYC1, Mint, Wallets, Contracts, CCTP, Gateway, Paymaster, and more.
Industry outlets flagged two immediate flashpoints: the upside for institutional settlement and the centralization/governance optics of a Circle-led L1. Analysts note that design choices (e.g., permissioned validators or governance pathways) will determine whether Arc is treated as a neutral infrastructure public good or a corporate-sponsored network.
A Circle blog post framed Arc as open and composable by default, stressing market-neutral principles and open-source intentions. The company said Arc will enter private testnet soon, with a public testnet this fall and mainnet beta in 2026.
Arc represents a strategic bet: make dollars the native money of an L1 to lower friction for payments, FX and tokenized finance. If Circle executes on interoperability, privacy controls, and truly open governance, Arc could re-center stablecoin flows on dedicated rails; if not, it risks being seen as a corporate enclave.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, investment, or financial advice. Readers should conduct their own research before making investment decisions. We use AI to help us research and enhance the text or visual aids, which are then edited by our team.
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