Circle builds Arc blockchain for institutional finance and AI economy

Circle said it designed its new Arc blockchain to meet institutional financial infrastructure standards and support an economy increasingly driven by autonomous AI.

The company sees a need for institutional-grade blockchain infrastructure capable of handling real money and securities, as well as an economic operating system built for AI agents to execute transactions and financial contracts.

In an a16z crypto interview on Oct. 16, Circle co-founder and CEO Jeremy Allaire said existing blockchains were not purpose-built to meet the infrastructure standards financial institutions require, prompting Circle to develop Arc.

Allaire said Circle was founded around the concept of programmable money operating on the internet. The company viewed blockchains as distributed computers for processing assured data, transactions and computation, with the aim of building an internet protocol for digital dollars.

Circle initially sought to add programmability to Bitcoin, but its technical goals diverged from those of the network’s community. It later moved its dollar protocol work to Ethereum after concluding that its virtual machine and asset issuance capabilities were sufficiently functional, leading to the development and launch of USDC.

By 2020 and 2021, however, Ethereum’s slow processing and high gas fees had become obstacles to applications requiring greater scale. Circle partnered with Solana and other layer-1 and layer-2 networks while pursuing a strategy of making USDC available across blockchains.

Allaire described Circle’s Cross-Chain Transfer Protocol, or CCTP, as the most widely used interoperability protocol across blockchain networks. He said Circle mints and redeems $150 billion per quarter, creating substantial liquidity across primary and secondary markets, on-chain markets and protocols.

Financial institutions also began taking the technology more seriously as stablecoins such as USDC addressed non-speculative needs for moving money. According to Allaire, this helped institutions see the potential to use blockchains for real money and securities.

Standards imposed on financial infrastructure by regulators and central banks also shaped Arc’s development. Allaire said no existing blockchain had been purpose-built for the emerging mainstream financial era, adding that the infrastructure must meet standards that would allow central banks to accept real money and investment contracts operating on it.

Arc combines lessons from open-source ecosystems and major platform initiatives while seeking broad stakeholder participation and institutional operating standards. Allaire said machines are also likely to become the primary users of such systems, making the transition toward an agentic AI economy a central part of Arc’s design.