Circle Advances Arc Network and Expands USDC Adoption in Middle East

Executive Summary

Circle's Arc network, designed as an "Economic OS for the internet," has launched its public testnet. Concurrently, the company is intensifying its focus on the Middle East, driven by robust demand for its USDC stablecoin and significant regulatory advancements, including in-principle approval in the Abu Dhabi Global Market.

The Arc Network: A New Financial Operating System

The Arc public testnet, launched on October 28, is a foundational step towards its mainnet target in 2026. The network is explicitly engineered for critical financial functions including payments, foreign exchange, lending, and capital markets. A core innovation of Arc is its utilization of USDC for dollar-denominated fees and gas, offering sub-second transaction finality and configurable privacy features. This design aims to mitigate the financial unpredictability associated with traditional token-based gas fees by enabling stable expense forecasting for businesses, effectively allowing them to budget gas fees as fixed operational costs. Enterprises engaging with Arc can benefit from subscription-based models for high transaction volumes and granular budget controls via conditional paymasters. Over 100 companies from banking, payments, technology, and artificial intelligence sectors participated in the Arc announcement and ecosystem launch, signaling broad industry interest in its enterprise-focused capabilities.

Strategic Market Expansion and Regulatory Milestones

USDC is experiencing significant growth in emerging markets, particularly across the Middle East and Gulf Cooperation Council (GCC) countries. Here, stablecoins have become integral to the crypto economy, serving as mechanisms for cross-border payments, everyday transactions, and as a bridge into broader digital asset markets. In the United Arab Emirates, where annual remittances exceed $47 billion, digital tokens like USDT and USDC are gaining traction as faster and more cost-effective alternatives to conventional money transfer services. Regional investors increasingly favor holding value in USDT or USDC for inter-exchange fund transfers or as a dollar-based hedge against inflation and limited access to hard currencies.

Circle's strategic expansion in the region is underscored by key regulatory and partnership developments. The company secured in-principle approval from the Financial Services Regulatory Authority of the Abu Dhabi Global Market (ADGM) to operate as a money services provider. This follows Circle's establishment of a new legal entity within the ADGM in December 2024, aimed at expanding its global footprint. Circle is also collaborating with Hub71, Abu Dhabi's leading global tech ecosystem, to foster digital asset innovation and strengthen the region's fintech infrastructure, leveraging the ADGM's digital regulatory sandbox.

Furthermore, Mastercard and Circle have deepened their partnership to facilitate USDC and EURC settlement for acquirers in the Eastern Europe, Middle East, and Africa (EEMEA) region. This initiative marks a pivotal moment, enabling acquiring institutions to settle transactions directly in stablecoins and paving the way for more efficient digital trade. Arab Financial Services and Eazy Financial Services are among the first beneficiaries of this expanded effort.

Broader Market Implications

The launch of the Arc network and the intensified focus on USDC adoption in the Middle East hold significant implications for the broader Web3 ecosystem and corporate finance. Arc's design, which emphasizes predictable, dollar-denominated transaction costs and sub-second finality, addresses key friction points for enterprise blockchain adoption. This approach could accelerate the migration of traditional financial "guts" to blockchain infrastructure, offering a robust framework for global payments and capital markets. The strategic partnerships and regulatory approvals in the Middle East exemplify a model for how stablecoin issuers can establish trusted, compliant corridors for digital asset integration into conventional financial systems. This dual strategy—technological innovation with Arc and targeted geographic expansion with USDC—positions Circle to drive further institutional and corporate engagement with stablecoins, potentially increasing their utility as a global medium of exchange and value transfer.