Circle raises $222M for Arc blockchain, reviving issuer-infrastructure conflict

Circle disclosed on May 11 that it raised $222 million in a token presale for Arc, its own layer-one blockchain, at a fully diluted network valuation of roughly $3 billion. Andreessen Horowitz led the round, with BlackRock, Apollo and Intercontinental Exchange, the parent of the New York Stock Exchange, among the backers. The company has spent two years presenting itself as the responsible stablecoin issuer that welcomed regulation — and Arc marks a decisive shift from issuer to infrastructure operator.

"The concern is not a prediction that Circle will abuse the position," a regulatory analyst familiar with market structure told Edgen. "The concern is that the position should not be available to an issuer in the first place, because the temptation it creates is structural and permanent."

Arc is designed as a stablecoin-native chain where USDC serves as the native asset for transaction fees. Circle has signaled plans for a native Arc token and a shift to proof-of-stake validation. The network has moved from announcement to a public testnet to a funded token raise inside roughly a year, with a mainnet launch expected to follow. USDC circulation stood at $77 billion as of the first quarter, according to Circle's disclosures.

The GENIUS Act, signed into law in July 2025, governs stablecoin reserves, disclosure and redemption — but says nothing about an issuer that also owns the settlement network beneath its coin. The law was written before any major issuer operated its own chain. Arc now occupies the space the legislation left blank, and the question for regulators is whether neutrality obligations should attach to the network before it carries real institutional volume.

The structural conflict Arc creates

Traditional finance keeps the issuer of an instrument separate from the infrastructure that clears and settles it. A clearing system must treat every participant's transactions neutrally, sequence them fairly and apply the same rules to the issuer's competitors as to the issuer itself. Arc gives Circle control over transaction ordering, validation and the rules of the network on which its own product competes. A rival stablecoin settling on Arc would operate on infrastructure owned by its direct competitor.

The investor list shows what is at stake. BlackRock manages the reserves that back USDC and is also a backer of Arc. Apollo is a major private-credit firm. Intercontinental Exchange owns the NYSE. These institutions are buying a stake in what they expect to become core financial plumbing — a settlement network for tokenized dollars and, over time, for tokenized funds and securities.

Why Circle built its own chain

The strategy carries a defensive logic. USDC competes with Tether's USDT, a coin more than twice its size, and with a growing field of bank-issued tokens and payment-company stablecoins. An issuer that only issues earns a spread on its reserves and little else. Stripe has built its own chain. Tether is expanding into infrastructure. For Circle to remain a pure issuer while its rivals become platforms would mean accepting the weakest position in the market.

The European Union's Markets in Crypto-Assets regulation, like the GENIUS Act, aimed its stablecoin rules at issuers and reserves. Neither regime built a market-structure chapter for an issuer that also runs a settlement network. Both sets of rules predate the case Circle has now created. Writing the missing chapter is cheapest while Arc is still a testnet graduating toward production, and far more expensive once the network has become infrastructure the tokenized-dollar economy depends on.

This article is for informational purposes only and does not constitute investment advice.