Circle Arc's operating structure: the distance between validator seats and decision-making authority

On September 16, 2026, Circle, the issuer of the U.S. dollar stablecoin USDC, opened the public mainnet (the production network that anyone can use) of its blockchain Arc. Arc is an open Layer 1 (a base blockchain with its own ledger) that Circle has described as built for financial markets and real-time movement of money. In the same release, Circle stated that in the week the mainnet opened, it made its first issuance of ARC tokens in the United States, minting the full initial supply of 10 billion. According to Circle, this issuance is not a commitment to a public launch but a technical step in the process of exploring a transition to proof of stake in 2027. Arc started with a structure in which permissioned institutions produce blocks, and how that structure will be widened is still under review.

Blocks produced by permissioned institutions

On Arc, anyone can run a node (a computer that receives and checks the chain's records) without permission and verify every block and transaction. These nodes, however, do not take part in consensus. Only permissioned validators propose and vote on blocks. Arc's developer documentation calls this approach permissioned proof of authority (PoA, a method in which permissioned institutions produce blocks). According to the documentation, validators are selected institutions with known identities, and they carry compliance obligations and operational guarantees.

Blocks are finalized as follows. Validators take turns acting as proposer and put out a block that bundles transactions, and all validators then vote in two rounds. When more than two-thirds of validators agree on the same block, that block is finalized and the transactions it contains cannot be reversed.

The validator requirements listed in the documentation are SOC 2 (an audit standard for security and availability) certification, nodes distributed across multiple regions, proposer rotation and uptime commitments. The documentation describes this design as replacing anonymous economic incentives with institutional accountability. The reasoning is that because validators are regulated institutions, malicious behavior carries consequences beyond the penalties set by the chain's rules.

Fees are paid in USDC. Circle explains that there is no need to hold a separate token with a fluctuating value in order to pay fees. According to the developer documentation, the base fee adjusts gradually in line with recent block utilization. The floor is about USD 0.001 for an ordinary token transfer under normal conditions, which is a design target. Circle's press release carries a notice that transacting on Arc requires the ability to obtain and use USDC.

Circle and the 11 founding validators

Circle announced its founding validators on August 5. Alongside Circle, they are 11 institutions: BlackRock, the U.S. securities depository and settlement institution DTCC, Galaxy, Global Payments, Intercontinental Exchange (ICE), Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo Corporation and Visa. The September 16 release listed the same names again and stated that validators will join in phases.

Grouped by headquarters location (a grouping Circle itself did not make), the list comprises eight in the United States, two in Japan (SBI Group, Sumitomo Corporation) and one in the United Kingdom (Standard Chartered).

Circle presented this structure as a new model: "a network secured by the institutions building on it." The September release added an explanation that these institutions take part in operating the network itself.

Distinction between validator seats and decision-making authority

In the September 16 release, Yoshitaka Kitao, Chairman of SBI Holdings, said that, as a founding validator, SBI would contribute to the network's operation and governance. The ARC token whitepaper that Circle published in May sets out who decides what. The whitepaper's initial governance (the system for setting operating rules) model divides decisions as follows.

Source: initial governance model table, Circle ARC whitepaper (May 2026 edition)

The whitepaper cites sanctions screening, jurisdictional restrictions and compliance as the reasons Circle determines the validator set. The validators' role is keeping the network running, producing blocks and executing decisions. The fourth row of the table covers items that need token holders in order to function, and the whitepaper page and the Arc blog state that the ARC token has not yet launched.

This arrangement is intended for the initial stage. The whitepaper states that decisions requiring quick judgment and direct accountability, such as incident response and validator set composition, would remain with Circle and designated bodies until governance matures. The goal is to shift them toward token holders as the participation base widens. Initial validator permissions are managed off-chain and disclosed when validators join. The Arc documentation describes a transition to proof of stake (PoS, a method in which the share of block production is determined by the amount of tokens staked) only as a possibility. It states that even if a transition takes place, it would be permissioned proof of stake that keeps compliance requirements in place.

In the initial phase of Arc, validators produce blocks and execute decisions. Circle determines the validator set, rule changes and incident response.

Where the won fits in: issuers and exchanges

In its mainnet release, Circle listed 22 local stablecoins that are live on, or onboarding to, StableFX (Circle's 24-hour stablecoin foreign exchange service). Among them is the won-denominated stablecoin KRW1. The release did not distinguish which coins are live. The StableFX page lists BDACS as the issuer of KRW1.

According to the StableFX page, local stablecoins are selected through Circle's partner program after review of reserve management, independent audits and operational soundness. To exchange them for fiat currency, participants must contract directly with the issuer and arrange their own means of custody. The service is available to businesses that have passed Circle's compliance review.

In a September 17 press release, BDACS stated that KRW1 had joined the Arc mainnet. It added that it plans to roll out services, including issuance, in phases as Korea's legal and regulatory framework takes shape.

On the exchange side, Upbit appears in the list of digital asset exchanges in Circle's release. According to TechM, Upbit supports USDC deposits and withdrawals via the Arc network. Korean companies are connected to this chain as issuers and exchanges, but they are not on the validator list.

Features not yet live and the timing of Korea's framework

The opt-in privacy features introduced by Circle (features that hide transaction details if the user chooses) are still in development for network-wide release. Circle explains that the goal is to provide both enterprise confidentiality and auditability for compliance teams on a single network. The StableFX page states that the feature that hides transaction details and counterparties is scheduled to go live after mainnet. The Arc blog notes that scope and timing are subject to change.

As of reports on September 22, the government bill for the proposed Digital Asset Basic Act (working title), which would bring won-denominated stablecoins into the regulatory framework, had not yet been submitted to the National Assembly. A public hearing that had appeared set to take place on September 30 was also postponed.

Four criteria for the industry to set together when choosing a payment chain

The line between what Arc has and has not yet disclosed serves as a yardstick for other payment chains as well.

First, disclosure of decision-making authority. Arc has published a table showing who decides validator set composition, rule changes and incident response. When reviewing other payment chains, the starting point is whether the same level of disclosure exists.

Second, eligibility for operational participation. Arc's validator set is determined by Circle on grounds of sanctions screening, jurisdictional restrictions and compliance. The whitepaper does not contain detailed selection criteria. The point to confirm is what criteria Korean institutions would need to meet to take an operating seat.

Third, entry and exit points for won stablecoins. On StableFX, converting a won stablecoin into fiat currency requires a contract with the issuer, and custody is the participant's responsibility. Korean rules on issuance and redemption conditions and user protection for won stablecoins are still at the legislative stage. Who holds the authority to freeze coins is also a point to confirm before using a chain.

Fourth, confidentiality and audit access. Arc's privacy features are still in development. Circle has put forward a design in which view keys determine who can see the data. Financial firms can judge this only once it is disclosed how, in practice, auditors and supervisory authorities would access records when the feature that hides them is switched on.

The four criteria are not a yardstick for ranking particular chains. Those choosing a payment chain need to work from the same set of questions to see the seat that produces blocks and the seat that sets the rules as separate.