Circle launches public testnet for Arc, a new blockchain built for global payments
Circle, the company behind the USDC stablecoin, has officially launched the public testnet of Arc — a layer-1 blockchain designed specifically to power digital dollar-based global payments. This milestone marks a critical step forward in Circle’s broader vision of reshaping the financial infrastructure for stablecoin use across borders.
Arc is not just another blockchain. It’s a payment-centric network developed with the aim of connecting local economies to the global digital financial system using stablecoins. The platform is being tested in partnership with leading financial giants, including BlackRock, HSBC, and Absa, as part of a collaborative initiative to explore the future of digital payments and tokenized finance.
According to Circle CEO Jeremy Allaire, Arc is engineered to act as the “economic operating system of the internet.” He emphasized the platform’s global scope, noting that its design is driven by the objective of bridging local markets with global liquidity. Allaire also highlighted the involvement of major financial institutions that collectively serve billions of clients and manage trillions in assets, making their participation a significant endorsement of Arc’s potential.
Arc’s scope extends beyond just facilitating peer-to-peer payments. It is also being developed to support on-chain foreign exchange (FX) operations and the tokenization of capital markets. These capabilities could unlock new efficiencies in financial transactions, especially for cross-border settlements and real-time asset transfers.
Robert Mitchnick, Global Head of Digital Assets at BlackRock, outlined the importance of exploring platforms like Arc. He pointed out that the integration of stablecoin-denominated settlements and on-chain FX could significantly improve how capital markets operate, making them more accessible and efficient.
The emergence of Arc comes amid a broader wave of innovation in blockchain-based payment infrastructure. Other tech and financial powerhouses are also moving into this space. Tether’s Plasma chain, which is already live, currently manages around $6 billion in stablecoin volume, making it the fifth-largest chain by digital dollar usage. Meanwhile, Google’s GUCL and Stripe’s Tempo are expected to debut soon, signaling a competitive shift in the blockchain payments sector.
Currently, Ethereum dominates the stablecoin landscape. Of the approximately $305 billion in total stablecoin supply, Ethereum accounts for about $162 billion — just over half. Tron follows with around 25% of the market. Despite this dominance, Ethereum is facing increasing pressure from emerging chains like Arc and Plasma that promise specialized functionalities tailored to payment and financial use cases.
In terms of transaction volume, Ethereum continues to set records. In October, its stablecoin transfer volume surpassed $2 trillion for the first time, emphasizing the platform’s continued relevance in the ecosystem. However, whether Ethereum can maintain this lead in the face of purpose-built competitors remains uncertain.
The stakes are high. If Arc’s testnet proves successful, a full-scale public mainnet launch could follow soon, potentially altering the dynamics of the stablecoin settlement market. Arc’s focus on interoperability, regulatory compliance, and financial institution integration could make it particularly attractive to enterprises and governments seeking efficient and secure digital payment solutions.
One of Arc’s key advantages lies in its modular design, which allows developers to build customized applications for payments, lending, FX, and asset tokenization. This flexibility could spur innovation and attract a diverse range of participants to the network. Additionally, Circle’s emphasis on regulatory alignment could give Arc a competitive edge in jurisdictions with strict financial oversight.
The role of stablecoins in the traditional financial system is also evolving rapidly. With central banks exploring digital currencies and more institutions adopting blockchain for settlement, the demand for robust, scalable, and compliant payment rails is growing. Arc positions itself as a solution ready to meet this demand.
Furthermore, Arc’s public testnet allows developers and institutions to start experimenting with its capabilities in a real-world environment. This phase is crucial for identifying performance bottlenecks, enhancing security measures, and ensuring that the network can handle enterprise-grade transaction volumes.
As the ecosystem matures, interoperability with existing blockchains and traditional financial systems will be critical. Arc’s architecture is reportedly designed with cross-chain compatibility in mind, allowing seamless value transfer across multiple networks and fiat gateways. This could significantly enhance user experience and reduce friction in global commerce.
In addition, Arc’s launch comes at a time when the utility of stablecoins is expanding beyond simple value storage. From remittances and payrolls to decentralized finance (DeFi) and real-world asset (RWA) tokenization, stablecoins are increasingly being used in diverse sectors. A blockchain like Arc, purpose-built for these applications, could accelerate adoption and unlock new business models.
Looking ahead, Circle’s strategy seems focused on positioning Arc as a foundational layer for the next generation of internet-native financial services. By aligning with institutional partners and building infrastructure that prioritizes speed, scalability, and compliance, Circle is attempting to bridge the gap between traditional finance and Web3.
In conclusion, the launch of Arc’s public testnet marks a pivotal moment in the evolution of blockchain-based payments. With the backing of major financial institutions, a focus on practical use cases, and a vision of global economic integration, Arc is poised to challenge the status quo of stablecoin infrastructure. Whether it can unseat Ethereum or coexist in a multi-chain future remains to be seen — but its arrival signals a new phase in the race to dominate the digital payments landscape.