Arc is a layer-1 blockchain developed by Circle, the company behind the USDC stablecoin, purpose-built to support stablecoin-based financial applications. Unlike general-purpose networks such as Ethereum or Solana, Arc is designed from the ground up to address the infrastructure challenges that have constrained institutional stablecoin adoption—volatile transaction fees, probabilistic settlement, limited privacy controls, and fragmented cross-chain liquidity.

The network uses USDC as its native gas token, features a built-in foreign exchange engine, and offers opt-in privacy designed for regulatory compliance. Arc's public mainnet is scheduled to launch on September 16, 2026, and Circle has announced a native ARC token that will serve as the network's coordination mechanism as it transitions toward a permissioned proof-of-stake model. The launch marks Circle's most ambitious step yet to evolve from a stablecoin issuer into a full-stack blockchain infrastructure provider.

"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."

Why Circle Built Arc

Stablecoins such as USDT and USDC have been part of the cryptocurrency market for years, but adoption accelerated significantly following the passage of the GENIUS Act, which President Donald Trump signed into law in July 2025. The legislation established a federal framework for stablecoin issuance and oversight, providing the regulatory clarity that banks, payment companies, and asset managers had cited as a prerequisite for deploying capital on-chain. The total stablecoin supply surpassed $200 billion in 2025, reflecting demand from both retail cross-border payments and institutional treasury operations.

Despite this momentum, Circle argues that most existing blockchains were never designed with stablecoins in mind. The company identifies several recurring limitations: fee volatility that complicates budgeting; probabilistic settlement that carries the risk of chain reorganizations; an absence of privacy controls for sensitive commercial transactions; and liquidity fragmented across multiple chains.

Arc is Circle's response. According to the company's official blog post introducing Arc, the network offers instant, irreversible transaction settlement—known as deterministic finality—alongside predictable fees denominated in stablecoins, optional privacy features that support regulatory compliance, and built-in interoperability with other blockchains and traditional financial systems.

Arc's public testnet went live in October 2025. The network is currently in private mainnet with more than 100 ecosystem and institutional builders. Circle CEO Jeremy Allaire said in August 2026 that the testnet had processed more than half a billion transactions across nearly 3 million wallets.

USDC as Native Gas

By using USDC—a digital currency backed by real-world reserves—to pay for transactions, Arc eliminates the need for users to hold volatile tokens to cover fees. The network can also support other stablecoins as gas through a paymaster system.

Circle said Arc's fee model builds on Ethereum's EIP-1559 architecture but replaces block-level fee adjustments with a weighted moving average of network demand. This smoothing mechanism is designed to keep fees low and predictable. All 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 approach enables dollar-based, auditable, and stable fee structures that Circle said are better suited to financial institutions than speculative token-based models.

Deterministic Settlement and Consensus

Arc's consensus layer is powered by Malachite, a Byzantine Fault Tolerant (BFT) engine based on Tendermint. Validator selection is currently permissioned, with participants evaluated on operational resilience, geographic distribution, and regulatory compliance. Circle plans a transition to a permissioned proof-of-stake mechanism over time.

In August 2026, Circle named its founding validator cohort, which will secure the network from launch. BlackRock, DTCC, Galaxy, Global Payments, ICE, Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo Corporation, and Visa will operate validators alongside Circle. The inclusion of DTCC, which provides clearing and settlement infrastructure for the US securities market processing trillions of dollars in daily transactions, alongside card-network operators Visa and Mastercard, signals engagement from core pillars of the traditional financial system.

To reduce the potential for abuse, Circle is developing tools including encrypted mempools, batch transaction processing, and multi-proposer consensus—all aimed at ensuring fairer execution for financial applications.

What Runs on Arc at Launch

Circle has identified Aave, Morpho, and Uniswap among the DeFi protocols expected on Arc from day one. Binance Wallet, Chainlink, Fireblocks, Kraken, Ledger, MetaMask, and Uptop will provide access and infrastructure, while Rain, Thunes, and Wirex will cover payments.

BlackRock is expected to deploy BUIDL, its tokenized money market fund, on Arc. DTCC plans to enable tokenization of assets held in its custody on the network, though that capability is not expected until the second half of 2027. These deployments align with a broader institutional tokenization trend that has drawn participation from central banks through Bank for International Settlements-coordinated pilots, as well as commercial banks exploring on-chain settlement of money market funds, treasuries, and other securities.

The ARC Token

Circle published the Arc white paper in May 2026, detailing the ARC native token's role as the "coordination mechanism" of the Arc network. Under the planned proof-of-stake model, a permissioned set of validators will produce blocks and maintain the network, earning rewards from inflation-funded issuance and fee-derived revenue that are converted into ARC.

Circle describes Arc as a "holistic platform that will expand over time," with ARC's role expected to grow as new capabilities emerge across 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 cross-chain transfer operations and stablecoin minting.

The initial ARC token supply will be 10 billion, with new token issuance expected to begin at an annual rate of 2–3%. The long-term goal, according to the white paper, is "inflation neutrality," with the exact timeline dependent on network growth.

Of the initial supply, 60% is allocated to the ecosystem to fund developer grants, token sales, and other participation mechanisms. Circle receives 25%, and 15% goes to a long-term reserve acting as a buffer against "unforeseen conditions."

The token has already begun to appear in Circle's financial results. 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, up from $150 million to $170 million, attributing part of the increase to recognized revenue from the ARC token presale.

Opt-in Privacy for Institutions

Arc includes a modular privacy system designed to balance compliance with confidentiality. Its 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 through view keys.

Over time, Arc plans to support private state and confidential computation, zero-knowledge proofs (ZKPs), multi-party computation (MPC), and fully homomorphic encryption (FHE).

Circle's suite of tools connects 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 provides chain-agnostic USDC balances with built-in liquidity rebalancing for wallets and applications.

"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."

Positioning in the Blockchain Ecosystem

Arc enters a competitive landscape that includes established 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 primary differentiator is its existing position as the issuer of USDC—one of the largest stablecoins by market capitalization—alongside the roster of blue-chip financial institutions committed to operating the network. Whether Arc can attract sufficient developer activity and transaction volume away from general-purpose chains remains the central question for its post-launch trajectory.

In May 2026, Circle announced a $222 million token presale for ARC, with the token achieving a $3 billion fully diluted valuation. The round was led by Andreessen Horowitz with a $75 million investment; other participants included BlackRock and Apollo Funds.

By constructing a purpose-specific chain for programmable, compliant financial operations, Circle aims to extend the utility of stablecoins beyond payments into real-time settlement, tokenization, and global capital markets.

"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 new details on August 6, 2026.