Circle Announces Arc, First L1 Blockchain Using USDC for Gas

Circle announced Arc, an EVM-compatible Layer-1 blockchain that uses USDC as the native gas token for transaction fees. The company revealed the project on August 12 alongside its second-quarter financial results, with a public testnet scheduled for fall 2025.

Arc targets stablecoin payments, foreign exchange, and capital markets applications. The network will feature a built-in stablecoin FX engine, sub-second settlement finality, and optional privacy controls. Circle plans full integration with its existing platform while maintaining interoperability with partner blockchains.

Circle reported second-quarter revenue and reserve income of $658 million, representing a 53% increase year-over-year. The company posted a net loss of $482 million, primarily attributed to $591 million in non-cash IPO-related charges. USDC circulation reached $61.3 billion at the end of Q2 and grew to $65.2 billion by August 10, 2025.

The company completed a $1.2 billion initial public offering in June. Circle issued 19.9 million primary shares at $31 per share from the total 39.1 million shares sold, generating $583 million in net proceeds after underwriting discounts.

Circle referenced the GENIUS Act, which became U.S. law on July 18. The legislation establishes federal regulations for payment stablecoins, with Circle stating the law largely codifies its existing compliance obligations.

The Arc announcement comes as other stablecoin issuers develop purpose-built networks. Tether backs a project called Stable that is building a USDT-focused chain. Separately, Plasma is creating a stablecoin-centered network with USDT as a primary asset.

Circle described Arc as fully integrated across its services while supporting dozens of existing blockchains. The company emphasized the network’s design for institutional use cases, particularly in traditional finance applications requiring fast settlement and regulatory compliance features.

The fall testnet launch will provide developers and partners access to test Arc’s capabilities before the mainnet deployment. Circle has not announced a specific timeline for the mainnet launch or detailed the network’s consensus mechanism and validator structure.