tl;dr
Circle plans to launch Arc, an enterprise-focused Layer 1 blockchain set for public testnet release between September and December 2025. Arc aims to support regulated money movement globally, integrating with Circle’s platform and partner blockchains. It will be Ethereum Virtual Machine–compatible, ...
Circle, the issuer of the USDC stablecoin, has unveiled plans to launch Arc, an enterprise-focused Layer 1 blockchain. Scheduled for a public testnet release between September and December 2025, Arc aims to become foundational infrastructure for regulated money movement within a globally distributed financial system.
Arc is designed to integrate seamlessly with Circle’s existing platform while maintaining interoperability with multiple partner blockchains. The network will be Ethereum Virtual Machine–compatible and use USDC as its default gas token. Key features include a built-in stablecoin foreign exchange engine, sub-second transaction finality, optional privacy functions, and high throughput with targets of 3,000 transactions per second (TPS) under 350 milliseconds finality with 20 validators. Under optimized conditions, Arc could reach 10,000 TPS with under 100 milliseconds finality using just four validators.
Privacy enhancements on Arc include confidential transfers allowing hidden transaction amounts with visible addresses and selective disclosure via a “view key.” The network’s MEV (Miner Extractable Value) mitigation plan features encrypted mempools, batch processing, and multi-proposer arrangements. Arc will also support Circle’s upcoming interest-bearing stablecoin USYC, fast bridging via Circle’s CCTP protocol, an integrated currency trading system named Gateway for licensed institutions, and AI-powered treasury management tools.
Beyond stablecoins, Arc is engineered to host regulated real-world assets like tokenized equities, bonds, private credits, and institutional-grade funds. Circle intends to collaborate with licensed asset issuers, custodians, and fund administrators to ensure legal compliance and full collateralization while aligning with traditional financial obligations.
Despite these ambitions, Arc has drawn criticism from parts of the crypto community. Some experts question the need for another Layer 1 blockchain, especially for stablecoins that lack diverse assets or a strong decentralized finance (DeFi) ecosystem. Critics describe Arc more as a consortium chain governed by a set of pre-approved private validators who have the power to reverse transactions through dispute protocols.
Detractors also argue that using USDC as the root token undermines the economic incentives required for validator independence, making a truly decentralized Layer 1 model impractical. Instead, this design promotes a closed, consortium-based structure resembling established financial intermediaries rather than the peer-to-peer ethos that originally defined blockchain technology. This debate highlights the tension between innovation in regulated financial infrastructure and the foundational principles of decentralization in blockchain ecosystems.