In its Q2 2025 financial report, Circle disclosed plans to launch ARC, a blockchain dedicated to stablecoins. Not just Circle—earlier reports indicated that payment giant Stripe, in collaboration with venture capital firm Paradigm, is quietly developing a payment-focused blockchain codenamed Tempo.

With Circle and Stripe leading the charge, will building proprietary blockchains become a trend? And how might this threaten the "global settlement layer" narrative of existing blockchains like Ethereum?

Giants Enter the Arena: Specialized Chains for Specialized Use

Circle’s Q2 2025 report revealed a major product roadmap—the launch of ARC, a Layer-1 blockchain tailored for stablecoin finance, later this year. The chain will be fully compatible with the Ethereum Virtual Machine (EVM), with USDC as its native gas token. According to disclosures, ARC will feature sub-second settlement confirmation and support "optional privacy" functions, catering to financial compliance needs.

For Circle, the core reason behind building its own blockchain is the rapid expansion of its stablecoin business. Q2 2025 data shows USDC circulation surged 90% year-over-year (YoY) to $61.3 billion, reaching $65 billion by August 10. On-platform USDC balances skyrocketed 924% YoY to $6 billion, while user wallets grew 68% to 5.7 million.

With stablecoin demand booming, cost reduction has become critical. Circle’s Q2 report shows distribution costs rose 64% YoY to $407 million, squeezing profit margins. By using USDC as native gas and integrating ARC into its ecosystem, Circle aims to reduce reliance on partners like Coinbase for distribution, reclaiming profitability.

ARC’s sub-second settlement is optimized for payments rather than pure decentralization. Circle has applied to establish a national trust bank and seeks access to the Federal Reserve’s master account and payment systems, which would significantly lower clearing costs and improve capital efficiency. ARC’s optional privacy and regulatory interfaces are also tailored for institutional use cases like cross-border payments and securities settlement.

For payment companies, the settlement layer is vital. Relying on third-party blockchains means ceding control over core infrastructure. Gas fee volatility and network upgrade uncertainties can disrupt payment experiences and profitability. A proprietary chain allows control over fee models and upgrade schedules, aligning with payment needs: low latency, high throughput, and predictable confirmation times.

For a leader like Circle in compliant stablecoins, owning a blockchain was inevitable. The current push is driven by the U.S. GENIUS Act’s passage and USDC’s market expansion.

For Ethereum, Is the Proprietary Blockchain Wave a Threat or an Opportunity?

Beyond Circle, payment giant Stripe is collaborating with Paradigm to develop Tempo, an EVM-compatible blockchain focused on high-performance, low-latency settlements for global merchant payments and cross-border clearing.

This isn’t just a niche strategy. After Circle and Stripe, players like PayPal, Shopify, Adyen, and even major banks may launch their own chains, each seeking payment sovereignty.

How will this impact existing blockchain ecosystems? Could it threaten Ethereum, which has recently embraced narratives like global RWA (real-world assets) and stablecoin settlements?

Short-term, these proprietary chains won’t fiercely compete with Ethereum, Solana, or BNB Chain, as they prioritize performance and compliance over maximal decentralization or diverse DeFi ecosystems. Long-term, however, threats loom.

Currently, most USDC transactions occur on Ethereum and its Layer-2s. If USDC natively operates on ARC and integrates into payment apps via APIs, stablecoin settlements could shift from "open multi-chain" to "vertical silos," draining Ethereum’s stablecoin volume and DeFi liquidity.

Similarly, if Stripe or PayPal embed on-chain payments directly into merchant systems, developers may prefer building on these proprietary chains over adapting Ethereum for compliant payments.

For investors, the bigger concern is Ethereum’s narrative shrinking as giants deliver RWA and stablecoin settlement layers first, potentially dampening market pricing expectations.

Yet opportunities remain—most proprietary chains will maintain EVM compatibility, offering cross-chain bridges or settlement channels. Ethereum could still serve as their clearing backstop and value hub, reinforcing its new narrative.