Circle plans to introduce an on-chain refund protocol for its Arc blockchain to address fraud and compliance issues in stablecoin transactions.

The Refund Protocol will hold disputed payments in escrow and enable arbiter-resolved refunds, providing a mechanism for treasury teams and banks to manage transaction disputes directly on-chain.

Arc was introduced in August 2025 as an enterprise-grade Layer-1 blockchain designed for stablecoin-powered payments, foreign exchange, and capital markets. The network emphasizes regulatory compliance while enabling instant USDC settlements for financial institutions.

In early September 2025, Circle partnered with Fireblocks to integrate Arc with the Fireblocks Network and Circle Payments Network. The collaboration aims to accelerate USDC adoption among banks through compliance-first dispute resolution tools.

The refund mechanism addresses growing institutional demand for on-chain payment infrastructure that matches traditional banking fraud protections. Treasury teams have increasingly adopted stablecoin infrastructure for payroll and settlement operations, creating a need for dispute resolution capabilities.