Arc by Circle: Innovation or Step Back for Decentralization?

Circle has revealed plans to launch Arc, a new Layer-1 blockchain aimed at becoming the backbone for stablecoin-driven finance. The network will be EVM-compatible, use USDC as its native gas token, and promise sub-second transaction finality. Arc’s design also includes an integrated foreign exchange system, optional privacy features, and native support for tokenized real-world assets. A public testnet is expected in late 2025, with the mainnet set to follow in 2026. Circle positions Arc as an “enterprise-grade” platform that will power regulated financial services across payments, FX, and capital markets, tying directly into the company’s existing infrastructure.

However, the project has stirred debate over whether it undermines the decentralized ethos of blockchain. Unlike open, permissionless networks, Arc will operate under a consortium model with a limited set of institutional validators. These validators will be pre-approved and given the ability to roll back transactions through a “dispute protocol.” Critics argue this gives the network characteristics closer to a centralized financial platform than a public blockchain.

Industry voices such as Adam Cochran of Cinneamhain Ventures have raised concerns that validators’ incentives are too closely tied to USDC, which could reduce their independence and create potential governance risks. Columbia Business School’s Omid Malekan also questioned the value of launching another L1 chain focused on stablecoins, especially in a space where existing ecosystems already offer robust DeFi activity.

Supporters see Arc as a practical solution for businesses that prioritize regulatory compliance, predictable fees, and high-speed settlement. But detractors warn it could signal a shift toward blockchains that cater primarily to institutional control rather than open participation—running counter to the original promise of decentralized finance.