This summer, Circle Internet Corp.'s successful public listing marked a significant milestone: stablecoins—once merely a niche application within the cryptocurrency realm—are gradually integrating into mainstream finance, with its dollar-pegged token USDC becoming a cornerstone of digital asset infrastructure. Currently, Circle is working to leverage this momentum for further development.

Approximately 95% of Circle's second-quarter revenue came from interest generated by cash and bonds backing USDC—a windfall while interest rates remain elevated. However, as rate expectations decline, Circle is seeking diversification and securing a more solid position in the digital finance sector.

Last week, it took its boldest move to date. Circle launched Arc, a new blockchain technology specifically designed to directly process stablecoin payment transactions, putting it in direct competition with global payment giants Visa and Mastercard, as well as the crypto networks it relies on, including Ethereum and Solana. Circle no longer wants to merely issue digital dollars—it aims to control the circulation system for those dollars and potentially charge fees on each transaction.

In April, the New York-based company announced the "Circle Payment Network" (CPN), a system designed to connect financial institutions, payment companies, digital wallets, and banking applications for instant payments. Arc works in tandem with CPN: one handles compliance and coordination, while the other manages actual fund transfers, with fees paid in USDC.

Circle CEO Jeremy Allaire said in an interview last week: "We are currently in the initial stages of building this massive financial network, which we believe has the potential to become one of the largest financial networks in history."

Shortly before Circle's announcement, Stripe's blockchain project "Tempo" was exposed in a now-deleted job posting. This move indicates that Stripe also wants to establish its own end-to-end network for stablecoin payment services.

The intensifying competition has some observers worried about the emergence of new "closed ecosystem" phenomena. Christian Catalini, founder of MIT's Cryptoeconomics Lab, said: "Ironically, this technology was originally designed to achieve greater interoperability and openness, yet these moves are attempting to build more closed ecosystems."

Since its IPO, Circle's stock price has soared over 350%, but its outlook shows slowing growth. According to David Koning, senior research analyst at Robert W. Baird & Co., non-interest income is expected to decrease in the second half, while distribution costs continue rising. In the second quarter alone, Circle spent $407 million (62% of revenue) on revenue-sharing agreements with partners like Coinbase Global to promote USDC usage.

"Their approach of adding distribution partners is indeed good, but if prices keep getting higher while their profit margins shrink, the situation becomes complicated," he said.

Today, Circle and Stripe's objectives appear aligned: jointly building competitive financial networks for digital currencies. Stephen Richardson, chief strategy officer and head of banking at Fireblocks, stated that companies are rushing to develop related services to "control how these assets flow"—and secure a position in the next generation of digital payments.

Fireblocks is among the first institutional platforms supporting Circle's Arc project, a collaboration that could potentially extend Arc services to 2,400 institutions using Fireblocks' infrastructure, including custody, transaction processing, settlement, and compliance services.

A Circle spokesperson stated: "Arc and CPN are part of Circle's strategy to build infrastructure for a new internet financial system, providing the connectivity and interoperability necessary to meet the evolving needs of the financial services industry."

Many companies are diversifying their investment strategies. For example, JPMorgan Chase has adopted a hybrid approach—continuing to operate a private blockchain platform called "Kinexys" (formerly "Onyx") while testing a deposit token on the public network "Base." The platform includes products like blockchain-based deposit accounts to enable multi-currency payments between bank clients.

Circle also continues supporting USDC on public blockchains while building its own infrastructure. The key question is how much control enterprises want over digital currency circulation and whether to build new systems, rely on existing shared systems, or both.

Public blockchains provide shared infrastructure for developer communities and can reduce long-term costs. Lex Sokolin, managing partner at Generative Ventures, said: "We have public blockchains, allowing us to share the costs of maintaining and reconciling ledgers. Now, every stablecoin has multiple blockchain options."

Stablecoins were originally intended to support an open and programmable financial system. However, by building comprehensive systems, Circle and Stripe may replicate Visa's model—ironically cooperating with the very networks they're trying to disrupt—integrating themselves into every step from account opening to settlement.

But building infrastructure is only one aspect. Another challenge remains: convincing other companies to develop on these private systems. Austin Campbell, founder of Zero Knowledge Consulting, stated: "All banks had this idea: 'Well, I'll build my own private blockchain,' then they realized, wait, other banks won't use my private blockchain. Now you see JPMorgan (possibly the earliest adopter of Onyx technology) also starting to deploy on the Base platform."

However, Circle says it hopes to remain market-neutral and provide services like cross-chain transfer protocols to help USDC and its digital euro EURC move between different blockchains.

Stripe's head of product and business, William Gaybrick, shared ambitions to introduce competition at every step of the transaction process. In a recent podcast interview, Gaybrick said: "In a world with more competition around how money moves, money flow could be more efficient. We're no longer accustomed to relying on network power."