Circle, the issuer of the USDC stablecoin, has unveiled ambitious plans to launch Arc, its proprietary Layer 1 blockchain. This new enterprise-focused network aims to revolutionize regulated money movement, providing foundational infrastructure for a globally distributed financial system and integrating seamlessly with Circle's existing platforms. The public testnet for Arc is slated for release between September and December 2025.
Arc's Vision and Technical Capabilities
Arc is designed to be a high-performance base for stablecoin payments, foreign exchange (FX), and capital markets applications. It will be Ethereum Virtual Machine (EVM) compatible, utilizing USDC as its default gas token, and will feature a built-in stablecoin FX engine with sub-second settlement finality. The network boasts impressive performance targets, aiming for 3,000 transactions per second (TPS) with under 350 milliseconds finality using 20 validators, and potentially reaching 10,000 TPS with even fewer validators. Arc will also incorporate optional privacy features like confidential transfers and selective disclosure, alongside a roadmap for MEV mitigation. Beyond supporting Circle's interest-bearing stablecoin, USYC, and offering fast bridging solutions, Arc is engineered to host regulated real-world assets (RWAs) such as tokenized equities and bonds, collaborating with licensed issuers to ensure compliance.
Community Concerns Over Centralization
Despite its advanced design, Arc has already drawn significant criticism from the crypto community regarding its perceived lack of decentralization. Critics, including venture capital partner Adam Cochran, argue that Arc is not a true Layer 1 blockchain but rather a "consortium chain" operated by a limited number of pre-approved, private validators. These validators reportedly possess the power to reverse transactions through "dispute protocols," a mechanism that fundamentally contradicts the immutable nature of traditional blockchains. Furthermore, the reliance on USDC as the root token is seen as removing the necessary economic incentives for validators to act independently, thereby necessitating a closed, consortium-based structure. This design choice has sparked concerns that Arc might reintroduce the "exploitative middlemen" and censorship that the blockchain industry was originally created to overcome.
