Circle Launches Arc Testnet Blockchain for Stablecoins

Circle's Layer 1 Blockchain

Circle, the issuer of USDC, has officially launched the Arc Testnet, marking a major step forward in infrastructure development.

Unlike existing Layer 1 blockchains, Arc is built specifically for stablecoins, digital finance, and institutional payments — a move that positions Circle not just as a stablecoin issuer but also as a platform for the next generation of financial blockchains.

According to CoinDesk, Arc is an open-source, EVM-compatible Layer 1 blockchain designed to serve as a base layer for financial applications such as tokenized funds, cross-border payments, and foreign exchange trading. Key design features include:

• Native gas token: USDC — making Arc the first major chain where transaction fees are calculated and paid in US dollars instead of volatile crypto assets.

• Speed: Transactions are completed in less than a second, enabling real-time payments and microtransactions.

• Privacy Options: Selective disclosure to institutional users requiring privacy to comply with financial regulations.

• Interoperability: Fully compatible with EVM, allowing developers to deploy existing Ethereum-based smart contracts with minimal changes.

Arc's Economic Operating System Goes Live

Arc's public testnet, which Circle has been developing since its launch in June 2025, is deployed as an open-source EVM chain optimized for financial principles, allowing developers to experiment with stablecoin swaps, forex liquidity pools, and tokenized asset settlements with enterprise-grade reliability.

Unlike Ethereum's gas volatility or Solana's risk of disruption, Arc applies USD-based transaction fees (via USDC burning) and sub-second validation via the Malachite consensus engine, ensuring predictable costs for high-volume use cases like remittances (an $800 billion global market).

The testnet, accessible via docs.arc.network, invites developers to experiment with native USDC gas — eliminating cryptocurrency fee volatility — and opt-in privacy via zero-knowledge proofs for sensitive forex transactions.

Circle CEO Jeremy Allaire describes it as “the next epic of the internet: Economic Operating System agents,” connecting the decentralized era with AI-driven automated finance.

In the long term, Arc aims for progressive decentralization, expanding the validator and governance set for community participation after the mainnet (expected in Q2 2026).

Evaluation and Conclusion

Arc is more than just another blockchain — it's Circle's statement that stablecoins deserve their own platform. The combination of institutional participation, real-world payment integration, and compliance architecture makes this one of the most strategically important blockchain launches of 2025.

If Arc succeeds, it could become the SWIFT of on-chain finance — a global, neutral, and regulated rail where digital dollars, tokenized funds, and institutional liquidity converge seamlessly.

Disclaimer: The information presented in this article is the author's personal opinion in the cryptocurrency field. It is not intended to be financial or investment advice. Any investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The views expressed in this article do not represent the official position of the platform. We recommend that readers conduct their own research and consult with a professional before making any investment decisions.