Circle and Stripe enter the public blockchain race, ushering in a full-scale battle for stablecoin blockchains

Stablecoin Blockchain Race Intensifies: Major players like Tether, Circle, and Stripe are developing their own blockchains to transform stablecoins from payment tools into enterprise-grade financial infrastructure, focusing on payment experience, liquidity, and regulatory compliance.
Circle's Arc Blockchain:
- Features: Arc is a high-performance, EVM-compatible Layer 1 blockchain designed for stablecoin-native applications, offering sub-second transaction finality, optional privacy, and multi-currency support (USDC, EURC, tokenized Treasuries).
- Target Use Cases: Cross-border payments, on-chain credit, capital market settlement, and automated treasury operations.
- Regulatory Edge: Backed by Circle’s compliance-focused approach, including monthly audits and adherence to frameworks like MiCA.
- Launch Timeline: Private testnet expected soon, public testnet in fall 2024, and mainnet beta in 2026.
Tether's Stable Chain:
- Competing Approach: Uses USDT as gas, offers zero-fee peer-to-peer transfers, and prioritizes market dominance over full transparency.
- Progress: Testnet live with $28M seed funding, but faces regulatory skepticism due to less transparent reserves.
Stripe's Entry:
- Tempo Blockchain: In stealth development, focusing on low-friction payments, supported by acquisitions like Bridge ($1.1B) and Privy to build end-to-end crypto payment infrastructure.
Trend Toward Dedicated Chains:
- Stablecoins are moving beyond general-purpose blockchains (e.g., Ethereum) to chains optimized for payments and compliance.
- Challenges include technical security, ecosystem growth, and regulatory hurdles, prompting some to consider L2 solutions for faster adoption.
Key Battlegrounds: Compliance transparency (Circle vs. Tether), fee structures, and institutional adoption will determine dominance in the stablecoin infrastructure space.

By Nancy, PANews

The battle for stablecoin infrastructure has already begun this scorching summer. Currently, giants like Tether, Circle, and Stripe have all invested in developing their own blockchains, attempting to upgrade from simple on-chain payment tools to enterprise-grade financial infrastructure. In this new battleground, payment experience, liquidity, and regulatory compliance will become key factors in the competition.

Circle is about to launch L1, offering optional privacy features

On August 12, Circle announced its first report card after its listing. Although it suffered a net loss of over US$480 million due to non-cash expenses related to the IPO, Circle showed a steady growth trend with the help of compliance advantages and ecological subsidy strategies. Its revenue increased by 53% year-on-year, and the annual circulation of USDC surged by 90%.

With the official implementation of the US stablecoin bill GENIUS, the development of stablecoins has reached a historic turning point, significantly expanding its growth potential. Simultaneously, with the entry of more traditional financial institutions, market competition has intensified. Consequently, Circle has set its sights on stablecoin payment infrastructure, striving to diversify its revenue channels.

On the eve of the earnings report, Circle announced the upcoming launch of Arc, an open Layer 1 blockchain designed specifically for stablecoin native applications. The aim is to create a blockchain platform that balances efficiency, compliance, and developer friendliness to meet the stringent needs of enterprise-level finance.

"Arc marks a pivotal moment in our journey to build a full-stack platform for the internet financial system. It combines the stability of stablecoins with the openness of blockchain, providing a trusted and efficient platform for businesses, developers, and financial institutions, helping the global economy enter the era of programmable money," said Circle CEO Jeremy Allaire.

Arc is positioned as an operating system for global financial innovation, supporting core applications such as cross-border payments, on-chain credit, and capital market settlement. It also provides secure and automated on-chain transaction capabilities for machines, systems, and AI agents, supporting complex financial scenarios such as real-time capital management, supply chain finance, and automated treasury operations.

According to official information, Arc is built on the high-performance consensus engine Malachite developed by Informal Systems. Validators are a group of 4 to 20 regulated, geographically distributed, and reputable institutions. This enables sub-second transaction finality, with final confirmation times under 100-350 milliseconds. This significantly improves transaction speed and efficiency, meeting the needs of high-value financial scenarios such as cross-border payments and capital market settlements. As an EVM (Ethereum Virtual Machine)-compatible blockchain, Arc enables developers to quickly leverage existing ecosystems and tools to build and deploy a variety of stablecoin financial products. Therefore, Arc's consensus design follows the familiar consortium chain architecture in China. This secure and controllable node structure with a high entry threshold is undoubtedly favored by regulators.

Arc uses USDC as its native gas and employs a dynamic fee market similar to Ethereum's EIP-1559, offering low and predictable USD-denominated fees. This addresses the pain point of businesses reluctant to hold volatile crypto assets to pay for gas. In addition to USDC, Arc plans to support EURC, tokenized short-term Treasury bond funds (USYC), or tokenized currencies through Paymaster, lowering the barrier to entry for multi-currency markets. Arc also features a built-in foreign exchange engine for institutional-grade RFQ quotation systems, enabling instant, 24/7 settlement and price discovery between stablecoins. Arc also offers optional privacy protection to help businesses comply with sensitive data (amounts are hidden, addresses are visible) and meet regulatory and compliance requirements. Arc has also deeply integrated with Circle's full product line, creating a stablecoin financial hub.

Arc’s private testnet is expected to go live in the coming weeks, with the public testnet scheduled to launch this fall and the mainnet beta expected to be officially released in 2026.

With multiple institutions competing in the same field, dedicated stablecoin chains may become a trend

In the field of stablecoins, Circle is not the first issuer to try to build its own chain.

"The strategies of some companies look exactly like moths to a flame." After Circle officially announced the launch of L1, Tether CEO Paolo Ardoino's rather provocative comment was interpreted by the industry as a veiled criticism of competitors.

As the world's largest stablecoin issuer, Tether has already taken the lead and launched two blockchains specifically optimized for stablecoins, Plasma and Stable, aiming to accelerate the global payment and clearing applications of USDT through zero-fee transactions, high throughput and dedicated stablecoin infrastructure.

Among them, Stable is similar to Circle's Arc in positioning. Both are institutional-oriented, EVM-compatible stablecoin dedicated L1 chains. Both hope to replace the position of general public chains in cross-border payment, settlement, and compliance scenarios. However, there are significant differences between the two in terms of fee structure, target market, compliance, transparency, and technical architecture.

For example, regarding fees and gas mechanisms, Stable uses USDT as its native gas token, offers zero-fee peer-to-peer transfers, and supports smart contracts denominated in US dollars. This design caters to both retail users (small transfers are stress-free) and institutions handling cross-border settlements and on-chain micropayments. Arc, on the other hand, supports multiple stablecoins such as USDC and EURC as gas tokens, and is deeply integrated with Circle's own foreign exchange services, CCTP V2 cross-chain protocol, and Circle Gateway, making it more suitable for institutions requiring seamless multi-currency, cross-border liquidity.

In terms of compliance and transparency, Arc leverages Circle's US registration and IPO compliance background. Its USDC reserves are 100% backed by cash and US Treasuries, audited monthly by the Big Four accounting firms, and compliant with multinational regulatory frameworks such as the EU's MiCA. This combination of full transparency and high compliance is a favorite "safety cushion" for institutions, but it also comes with high costs and low profit margins. Stable, on the other hand, relies on Tether's market dominance. Tether's reserves hold more high-yield but high-risk assets, and its information disclosure is less transparent than USDC. This limits its penetration in highly compliant markets, but allows it to maintain higher profitability.

In terms of project progress and capital support, Stable has launched its testnet and completed a $28 million seed round of financing led by Bitfinex and Hack VC; Arc has not yet entered the testnet stage, but USDC is backed by the resources and credit endorsement of heavyweight institutions such as Coinbase and BlackRock.

The battle for the L1 stablecoin public blockchain isn't just a game for crypto-native companies. Recently, fintech giant Stripe was revealed to be collaborating with crypto venture capital firm Paradigm to develop Tempo, a payments-focused L1 blockchain. The chain will be compatible with the Ethereum programming language and positioned as an efficient, low-friction payment settlement network. While Tempo is still in stealth development with a team of only five people, Stripe's accompanying initiatives, including the $1.1 billion acquisition of stablecoin infrastructure company Bridge and crypto wallet developer Privy, underscore its ambition. This suggests Stripe is building a full-stack crypto payment infrastructure, from issuance and custody to settlement.

This trend toward dedicated stablecoin chains may see even more participants. Previously, stablecoins primarily relied on public chains like Ethereum and Tron, lacking an underlying network tailored for payment, clearing, and compliance scenarios. Now, with stablecoins entering mainstream financial markets and assuming greater responsibilities for cross-border payments and financial settlement, more institutions are trending toward developing their own chains. However, building L1 from scratch presents multiple challenges, including technical security, a cold start for the ecosystem, economic incentives, and regulatory compliance. This represents a significant investment and carries significant risks. In contrast, building L2 on established public chains, while offering slightly less autonomy, inherits existing security and liquidity, allowing for rapid integration into the developer and user ecosystem. This may offer a more efficient and low-risk compromise for some institutions.