A payment network that settles in less than half a second, and runs every transfer on USDC, a stablecoin pegged to the U.S. dollar rather than a volatile cryptocurrency, has signed up six major financial institutions before it has processed a single trade. The network is Arc, a blockchain built by Circle (NYSE: CRCL) from scratch for dollar-denominated settlements and cross-border payments. BlackRock, Visa, Mastercard, Standard Chartered, MoneyGram, and Intercontinental Exchange, the parent company of the New York Stock Exchange, are committed to the platform ahead of its September launch.
Why institutions chose USDC over native crypto tokens
Most blockchains, including Ethereum and Solana, require users to hold their native tokens to pay transaction fees. That introduces a pricing problem. Ether and Solana have each dropped about 60% over the past 12 months, meaning the cost of running a transfer can shift dramatically from one day to the next. Arc denominates every fee in USDC, which Circle backs with cash and U.S. Treasury holdings. The cost stays flat.
Arc also runs around the clock and processes transfers in under half a second, faster than tapping a credit card at a store. Circle positions this as a direct alternative to SWIFT, the messaging network that banks use for international wire transfers, at a fraction of a cent per transaction.
How Arc connects to the existing DeFi ecosystem
Arc's code is built on Ethereum's technical foundations. That means it arrives compatible with Ethereum's existing decentralized finance (DeFi) applications and tokenized real-world assets. Decentralized finance refers to financial services that run on open software rather than through a bank or broker. Developers can connect to Arc using standards they already know.
Circle is also positioning Arc as a settlement layer for AI agents, software programs that execute tasks autonomously.
Where Arc sits in the stablecoin competition
In June, more than 140 companies, including BlackRock, Visa, and Mastercard, backed a rival token called Open USD (OUSD). OUSD distributes control across its partner network rather than holding it with a single issuer, a direct contrast to Circle's model with USDC. At the time, that looked like a threat to USDC's standing as the most widely used stablecoin in the United States.
Arc shifts the picture. Several of the same institutions that backed OUSD are now in Arc's partner list. Circle says Arc settles faster than OUSD, which relies on third-party blockchains to process payments.
Circle's stock has declined nearly 60% over the past 12 months. The company still collects most of its revenue from interest on the cash and Treasury holdings backing USDC, not from Arc itself.