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Circle to launch Arc, a layer 1 blockchain for stablecoin finance

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Arc is engineered for high-performance, EVM-compatible settlement in regulated financial environments, featuring deterministic sub-second settlement, opt-in privacy, and a permissioned Proof-of-Authority validation system.

Circle to launch Arc - a layer 1 blockchain for stablecoins
Photo: Kevin Rodriguez

Key Takeaways

  • Circle is launching Arc, a layer 1 blockchain focused on stablecoin payments and capital markets.
  • Arc will use USDC as its native gas token and aims to enable compliant, instant cross-border transactions.

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Circle Internet Group, the issuer of the USDC stablecoin, has announced plans to launch Arc, a new EVM-compatible layer 1 blockchain designed specifically for stablecoin finance and tokenized assets. The announcement came alongside the company’s second-quarter earnings report today.

As noted in Arc’s litepaper, the network will use USDC as its native gas asset and deliver sub-second settlement finality, opt-in privacy features, and full integration with Circle’s platform.

Arc’s key innovations include USDC-based transaction fees, eliminating volatile native tokens from gas pricing. The network guarantees final and irreversible settlement in under one second, and offers confidential transfers that conceal transaction amounts while maintaining visible addresses.

“Arc is designed to serve as the hub for stablecoin liquidity and applications. With fast finality and USDC as the gas token, Arc will enable users to instantly access any application across more than dozens of blockchains through Circle’s CCTP and Gateway,” according to the paper.

The network aims to facilitate cross-border payments, foreign exchange, capital markets, and real-world asset tokenization within legal compliance frameworks and could serve as a major settlement layer for global finance.

Circle plans to launch Arc’s public testnet this fall, with the mainnet beta to follow, featuring the core fee architecture, sub-second finality, the FX engine roadmap, and integration with its broader product suite.

Later upgrades will add confidential transfers, MEV mitigation techniques such as encrypted mempools and batch processing, and a permissioned proof-of-stake governance model to expand validator participation.

Circle reports $658M in Q2 2025 revenue, USDC circulation up by 90%

Circle reported second-quarter revenue of $658 million on Tuesday, with USDC stablecoin circulation exceeding $61 billion, up 90% year-over-year.

The company posted a net loss of $482 million for Q2 2025, primarily due to $591 million in IPO-related non-cash charges, including $424 million in stock-based compensation and a $167 million increase in convertible debt value. Adjusted EBITDA grew 52% year-over-year to $126 million.

“Circle’s successful IPO in June marked a pivotal moment—not just for our company, but for the broader adoption of stablecoins and the growth of the new internet financial system,” said Jeremy Allaire, Co-Founder, Chief Executive Officer, and Chairman at Circle.

The company completed its $1.2 billion initial public offering in June, generating $583 million in net proceeds before deducting $12.8 million in offering costs.

Key operational metrics show USDC’s market share reached 28% of all fiat-backed stablecoins. The company minted over $42 billion in USDC during the quarter, while redemptions totaled $40.8 billion.

Circle launched its Payments Network in May with four active payment corridors and has over 100 financial institutions in the pipeline. The company also announced new partnerships with Binance, Corpay, FIS, Fiserv, and OKX

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