Circle is building its own blockchain, while Wall Street is operating nodes

stablecoin giant Circle launches Arc Main Network: Betting on infrastructure is more important than owning dollars

Circle launched the USDC-based native Layer 1 blockchain-Arc Main Network on September 16. The move follows the U.S. Senate vote on the CLARITY Act, which is considered the most influential encryption legislation since the GENIUS Act.

Arc's lineup of main-network validators includes institutions such as BlackRock, DTCC (American Depository Trusts and Clearing Corporation) and Visa, making it the most powerful institutional foundation in blockchain history. ARC token pre-sales raised US$222 million at a fully diluted valuation of US$3 billion, led by a16z crypto, with participation from BlackRock, Apollo and ARK Invest.

Starting in 2027, DTCC will tokenize assets managed by DTC on Arc, while BlackRock will natively deploy its $2.87 billion BUIDL funds on the network. Arc runs on top of Malachite, a BFT consensus engine derived from Tendermint that achieves final certainty of less than 500 milliseconds. Its EVM-compatible execution layer is built on Reth, and gas costs are priced in USDC.

The timing can be either savvy or reckless. Circle will launch the Arc main network on September 16, 2026, just a day after the U.S. Senate voted on the CLARITY Act in closing debate. If the bill passes with a 60-vote threshold, Arc will enter a market that has just established stablecoin rules that Circle helped create; if the bill fails, Arc will still start, entering a regulatory ambiguity that could last for years.

Regardless of the outcome, the stablecoin company that spent a decade convincing Wall Street to trust USDC is now asking the same Wall Street institutions to run its blockchain nodes, and Wall Street agrees.

Why do stablecoin companies need their own chains?

The short answer is: profit margin. Circle's revenue last quarter was $701 million, but most of the revenue came from interest on U.S. Treasury reserves that support the USDC. When interest rates fall, this part of income will also decrease. Regardless of the interest rate environment, blockchain can generate revenue through transaction fees.

The deeper reason involves the structural problems that have plagued the USDC since its inception. Circle issues U.S. dollars, and Ethereum, Solana, Base and other dozen networks transport it. Every time a USDC transaction is settled on Ethereum, Circle cannot extract value from it. Gas fees are owned by ETH pledgers, MEV proceeds are owned by searchers, and Circle gets nothing except float in its underlying reserves.

Arc changed this situation. On Arc, USDC is a native Gas token. Fees on each transaction are denominated in dollars, not volatile network assets. ARC tokens (25% held by Circle during the Creation phase) accumulate value through validator rewards and token destruction. Circle is no longer just a publisher, but also a builder of infrastructure.

This is a vertical integration strategy that crypto purists have warned about for years, and now it is happening.

Change the list of verifiers for conversations

When Circle announced its founding Verifier Alliance on August 5, the reaction was clearly divided on the ideological line. Crypto-native developers see it as an alliance chain dressed in a decentralized guise; traditional financial executives see the most credible startup network since Visa joined Solana.

The eleven founding verifiers include: BlackRock, DTCC, Galaxy, Global Payments, ICE, MasterCard, MoneyGram, SBI Group, Standard Chartered Bank, Sumitomo Corporation and Visa. Looking at the list again: DTCC liquidates and settles the vast majority of U.S. securities transactions;ICE owns the New York Stock Exchange; BlackRock manages more than $11 trillion in assets. These are not speculative crypto funds seeking yields, but institutions that already run the traditional financial system and are now running blockchain nodes built by a stablecoin company.

DTCC's cooperation alone deserves to be discussed separately. Starting in the second half of 2027, DTCC will tokenize assets held by DTC on Arc, covering tokenized repos, collateral liquidity and corporate behavior. These tokenized assets will carry the same protections, rights and guarantees as traditionally held securities. This is not a pilot project, but a performance of DTCC committing its roadmap to specific chains.

BlackRock plans to deploy its BUIDL fund, a tokenized treasury bond product that has exceeded US$2.87 billion in assets, on Arc. Institutional investors can use native USDC to subscribe, redeem and deploy fund assets in a single on-chain environment. No bridging, no packaging of tokens, no disintermediation friction.

Inside the machine: How Arc actually works

Arc is not a rebranded Ethereum fork. It borrows from Ethereum where it makes sense, and deviates from Ethereum when Circle decides the agency needs a different solution.

The consensus layer runs Malachite, built by a team that joined Circle from Informal Systems. Informal is the company behind much of the original Tendermint and IBC work in the Cosmos ecosystem, meaning Arc's consensus engine has a deep BFT pedigree. Malachite provides certainty finality below 500 milliseconds. This is different from the probability and finality of Ethereum. Transactions on Arc are finalized when the block closes.

The execution layer is built on the Rust based Ethereum client Reth. This provides developers with a familiar EVM-compatible environment. Solidity, Foundry, Hardhat and existing Ethereum tools are available out of the box. Developers can migrate contracts without rewriting.

The fee model starts from EIP-1559, but replaces block-level fee adjustments with a weighted moving average of network demand. The result is that fees remain low and predictable at the dollar level because they are literally denominated in dollars. There is no longer any need to guess whether the transaction cost will be $0.50 or $50.

Arc is also equipped with a layer of privacy that hides the transfer amount if needed, which is directly targeted at institutional users who cannot broadcast transaction activity on public ledgers.

In the second quarter of 2026, Circle reported that Arc TestNet processed more than 500 million transactions in nearly 3 million wallets. The private mainnet is currently in operation, with more than 100 institutions and ecosystem participants.

$3 billion bets and token issues

In May, Circle completed a $222 million pre-sale of ARC tokens, with a fully diluted valuation of $3 billion. This round will sell 740 million coins at US$0.30 each, accounting for approximately 7.4% of the initial supply of 10 billion.

The investor list is a "Who's Who" of institutional crypto capital: a16z crypto led the investment, with BlackRock, Apollo Funds, ARK Invest, General Catalyst, Haun Ventures, Intercontinental Exchange, IDG Capital, Janus Henderson, Marshall Wace, SBI Group and Standard Chartered Bank Venture Capital all participating.

Token allocation is divided into three parts. About 60% is spent on ecosystems, including developer, grant and network growth;Circle reserves 25% for development, pledge and governance; and the remaining 15% is placed in long-term reserves to stabilize the market.

The dual-token model is disturbing to some observers. The USDC handles Gas fees and settlements, and the ARC handles pledges, governance and verifier rewards. Circle gets revenue from both ends of the equation: It collects float on USDC reserves, gets pledge income and fee income from its 25% ARC position, and charges corporate partners. The jump in revenue guidance tells the story: Circle has doubled its full-year 2026 "other revenue" forecast to $310 million to $330 million, a significant increase from the previous $150 million to $170 million, mainly due to ARC token pre-sale earnings and expected network fees.

CRCL shares then soared above $72, although they were still about 10% below their 2026 high. Markets are pricing potential, not certainty.

CLARITY Act factors

The September 15 closing debate vote on the CLARITY Act was not a coincidence Circle ignored. The bill passed the House in July 2025 and the Senate Banking Committee in May 2026 with a vote of 15-9, representing the most comprehensive attempt at digital asset regulation in U.S. history.

For Circle, the importance of the CLARITY Act is that it retains the GENIUS Act framework and treats USDC as a regulated payment stablecoin. The text of the bill prohibits interest or gain on idle stablecoin balances while allowing activity-based rewards, a distinction that shapes the way the Arc fee model operates.

If the CLARITY Act is passed, Arc will enter a market with clear rules, and Circle's pioneering compliance approach will become a moat of competition. Any competitor that cuts corners on regulation suddenly faces a choice: either comply or lose institutional customers.

If the bill fails to reach 60 votes, the regulatory outlook will remain unclear until 2027. Three unresolved battles remain: who enforces the ethical rules related to government officials who hold crypto interests, whether stablecoin rewards can survive in their current form, and how broad the scope of developer protection will extend.

Circle has positioned Arc as an architecture for both scenarios. The Verifier Alliance aims to meet regulatory requirements before they ask. Chains verified by DTCC, BlackRock and Visa are chains that any compliance department can approve without having to lose sleep.

Fenced gardens or open infrastructure?

This will define Arc's legacy and may even be the tension in crypto development over the next decade.

Critics like Adam Cochran call Arc an "alliance chain" rather than a true blockchain. The validator is permission-based and is selected by Circle. In theory, they could reverse the deal. Governance models prioritize institutional trust over censorship resistance. By every metric critical to the vision of crypto-primitive cypherpunk, Arc is a step backwards.

Circle responded that this was exactly what the agency needed. Known, vetted verifiers. Governance-based reversibility as a compliance function. Dollar denominated expenses that the CFO can budget. Meet the privacy controls of the trading desk. These are not flaws, but requirements that have kept Wall Street out of public blockchain over the past decade.

The deeper question is whether this model can coexist with permissionless networks or will inevitably replace them. If DTCC settles securities on Arc and BlackRock deploys BUIDL there, will institutional funds still need to have access to Ethereum? If so, what happens to the economic security model of chains that rely on institutional activity to justify their Gas fees?

Tether is asking the same question from different angles. It launched StableChain, another stablecoin native settlement network, in December 2025, although there is less institutional firepower behind it. The stablecoin distribution war is no longer about whose dollar token wins, but about whose dollar token owns the orbit.

There is a possible future where each major stablecoin issuer runs its own chain, each optimized for its own regulatory jurisdiction and institutional relationships. USDC is used for U.S. institutional clearing on Arc, USDT is used for emerging market payments on StableChain, and regional stablecoins are used on their respective specially built networks. Ethereum and Solana become the interoperability layer between these walled gardens, rather than the main settlement layer itself.

This future will represent a fundamental shift from establishing a permission-free vision for the industry. But it will also represent the most practical path to trillions of dollars in settlement volume on the chain.

Stock market pricing vs chain market demand

Circle is listed as CRCL and is trading at nearly $72 as of early September. Shares have risen from IPO lows, but are still about 10% below their 2026 highs. Wall Street analysts are divided on whether Arc is a growth catalyst or a capital black hole.

The reason for bullish is simple. Circle generated revenue of $701 million in the second quarter, adjusted EBITDA of $143 million, and a profit margin of 50%. USDC circulation reached US$73.3 billion, a year-on-year increase of 19%. On-chain USDC transaction volume reached US$14.8 trillion in the second quarter, an increase of 151% compared with the same period in 2025. If Arc captures a portion of this settlement volume and applies its own fee structure, there is huge room for revenue upside.

The bearish reasons are equally clear. Building and maintaining the Layer 1 blockchain is expensive. A $222 million token pre-sale helps, but network effects are not guaranteed. Ethereum has a seven-year first-mover advantage in developer tools and DeFi combinations. Solana spent years building her own institutional relationships. Moreover, the license verifier model may alienate DeFi developers who drive any sticky organic activity in the blockchain ecosystem.

In addition, there is the question of whether a listed company should run blockchain. Every node operator decision, every governance vote, and every token destruction have become major events that need to be disclosed to the SEC. The regulatory overhead of running blockchain as a public company is unprecedented because no public company has tried it at this scale before.

Matters to Watch

• September 15 Closing debate vote on the CLARITY Act: If the Senate reaches 60 votes, Arc will enter the clearest regulatory environment ever seen in any blockchain. If it fails, see if Circle accelerates international validator recruitment as a hedge.
• Arc main network transaction volume in the first 30 days: Test network processed more than 500 million transactions. Mainnet needs to demonstrate organic needs beyond verifier testing to justify the $3 billion valuation.
• DTCC tokenization schedule: The goal of tokenization of DTC's custody assets in 2027 is the most important milestone in Arc's institutional argument. Any acceleration or delay will affect CRCL's share price.
• BUIDL deployment on Arc: BlackRock brings its $2.87 billion tokenized treasury bond fund to Arc, which will be the largest single asset deployment on the new chain since the launch of Ethereum.
• Ethereum's reaction: If Ethereum core developers or the Ethereum Foundation announce a response to Arc's institutional clearing feature, it shows that the competitive threat is real. Silence will be more indicative.

FAQs

What is Circle Arc?

Arc is a Layer 1 blockchain built by Circle, the company behind the USDC. It uses USDC as a native Gas token and runs on a Tendermint-derived consensus engine called Malachite and is specifically designed for institutional clearing and stablecoin finance. The public main network will be launched on September 16, 2026.

Who is Arc's verifier?

Eleven founding verifiers will be running the network at startup: BlackRock, DTCC, Galaxy, Global Payments, ICE (parent company of the New York Stock Exchange), MasterCard, MoneyGram, SBI Group, Standard Chartered Bank, Sumitomo Corporation and Visa. These are license verifiers selected by Circle and are not open to anyone.

What is an ARC token and how does it work?

ARC is a pledge and governance token for the network, separate from the USDC, which handles Gas fees. The initial total supply is 10 billion tokens. Circle holds 25%, 60% is used for ecosystem development, and 15% is stored in long-term reserves. The pre-sale price is $0.30, valuing the network at $3 billion.

How fast is the Arc blockchain?

Arc provides certainty finality below 500 milliseconds, meaning that transactions are fully confirmed when the block closes. This is faster than Ethereum's probabilistic finality and comparable to Solana's speed, although Arc prioritizes settlement certainty over raw throughput.

Is Arc decentralized?

It depends on your definition. Arc is launched as a license verifier and is all selected by Circle. The roadmap calls for a shift from proof of authority to proof of stake over time, which will open up the participation of verifiers. Critics call it an alliance chain. Circle calls it the scale that organizations need.

How does the CLARITY Act affect Arc?

The closing debate on the CLARITY Act took place on September 15, the day before Arc's main network. If passed, it would codify the stablecoin framework of the GENIUS Act and create clear rules for the classification of digital assets. Circle has built Arc to comply with any outcome, but adoption will give USDC and Arc a regulatory advantage over less compliant competitors.

Can developers use Ethereum tools to build on Arc?

Yes. Arc's execution layer is based on Reth and is fully compatible with EVM. Solidity smart contracts, Foundry, Hardhat and other Ethereum development tools can work on Arc without modification. Developers can directly port existing Ethereum contracts.

How does Arc compete with Ethereum and Solana?

Arc is not trying to replace Ethereum or Solana as a universal platform. It targets a specific niche market: institutional stablecoin clearing. Its advantages in this area are dollar-denominated fees, sub-second finality, regulatory compliant verifiers and native USDC integration. The disadvantage is that the developer ecosystem is much smaller and does not have the existing DeFi portfolio.