circle raises $222 million for arc blockchain to sideline ethereum

At a glance:

• Circle secured $222 million in a presale of the ARC token at a $3 billion fully‑diluted valuation.
• ARC will run as a public Layer 1 blockchain that uses USDC as its native gas token, bypassing ether.
• Institutional backers include a16z crypto, BlackRock, Apollo Funds, Intercontinental Exchange and others.

Circle launches arc as a stablecoin‑centric layer‑1

Circle, the issuer of USDC—the second‑largest stablecoin by market cap—announced a $222 million raise to fund its own blockchain infrastructure project called Arc. The capital was raised through a token‑presale of the ARC token, which was priced at a $3 billion fully‑diluted valuation. The funding round was led by a16z crypto with a $75 million commitment, and attracted a roster of heavyweight investors such as BlackRock, Apollo Funds, Intercontinental Exchange, SBI Group, Standard Chartered Ventures, ARK Invest and several others.

The primary objective of Arc is to bring more of the underlying technology that powers USDC onto a network that Circle fully controls. By doing so, Circle hopes to cut operating costs, lower transaction fees for its users, open new revenue streams and, crucially, reduce reliance on existing public blockchains—most notably Ethereum.

How arc works and what it offers

Arc is positioned as a public Layer 1 blockchain built specifically for institutional finance. Unlike most blockchains that require a native crypto asset for gas, Arc will use USDC itself as the native gas token. This design eliminates the need for ether or other crypto‑native assets when paying transaction fees. The network promises sub‑second finality, optional privacy features and full compatibility with the Ethereum Virtual Machine (EVM), allowing developers to port existing smart contracts with minimal friction.

Testing of Arc began in October, and the whitepaper describes the ARC token as a coordination asset that handles governance, validator security and overall network operations. Validators will stake ARC to secure the chain, while governance proposals will be voted on using the same token, creating a self‑contained economic model.

Competitive landscape: stablecoin chains on the rise

Circle’s move mirrors a broader trend among stablecoin issuers to build proprietary blockchains. Tether, the issuer of the largest stablecoin USDT, launched StableChain in late 2023. Its mainnet went live in December 2025 with a native STABLE token used for governance staking and validator incentives. Like Arc, StableChain centers on stablecoin transactions to support high‑volume, predictable real‑world settlements.

Coinbase also operates Base, an Ethereum Layer 2 that funnels exchange users toward on‑chain activity while promoting USDC as the primary currency. Kraken and Robinhood have announced their own blockchain projects, and the New York Stock Exchange is developing a tokenization platform. These initiatives underline a shift away from relying solely on public networks such as Ethereum and Solana.

Implications for ethereum and the wider crypto ecosystem

Stablecoins first flourished on Ethereum, where they powered the DeFi boom. However, the high gas fees and the regulatory desire for more controllable infrastructures have prompted issuers to seek alternatives. By building chains that use their own stablecoins as gas, companies can achieve regulatory compliance without the decentralization trade‑offs that critics argue erode integrity.

Ethereum now finds itself in an “awkward middle ground.” It is perceived as too centralized to compete with Bitcoin’s pure decentralization, yet too decentralized to match the efficiency and control offered by Circle’s Arc, Coinbase’s Base or Tether’s StableChain. Proponents of Ethereum argue that its robust developer ecosystem and EVM compatibility will keep it dominant, but the rise of stablecoin‑centric chains could siphon a significant share of transaction volume away from the network.

Looking ahead: potential cooperation and market dynamics

The split between Bitcoin purists and stablecoin‑driven fintechs defines the current fault line in crypto. Nevertheless, there are signs of cooperation—Tether holds Bitcoin as part of its USDT reserves, illustrating that the two camps can coexist. Circle’s success with Arc will depend on its ability to attract institutional validators, deliver on its latency promises and convince users to migrate USDC transactions onto the new chain. If it does, the move could reshape settlement infrastructure across the crypto industry and further marginalise Ethereum’s role in stablecoin finance.