Wall Street’s Darling Stablecoin Raises $222M to Starve Ethereum

Increased centralization around stablecoin issuers and other fintech companies has defined much of the crypto market in recent years. And Circle now has furthered this trend by securing a $222 million raise for its blockchain infrastructure project, Bow. The funding comes from a pre-sale of the ARC token with a fully diluted value of $3 billion. Circle already issues the second-largest stablecoin by market capitalization, USDC, but is now looking to further consolidate the underlying technology around its dollar-pegged token. The aim is to reduce costs, reduce transaction fees, increase revenue streams and improve functionality for users, while taking other crypto networks, namely Ethereum, out of the equation.

Circle’s recent token offering attracted participation from a large group of institutional backers. a16z crypto led with a $75 million commitment, followed by BlackRock, Apollo Funds, Intercontinental Exchange, SBI Group, Standard Chartered Ventures, ARK Invest and others.

Arc functions as a public Layer 1 blockchain designed specifically for institutional finance. It uses USDC itself as its native gas token rather than relying on ether or other native crypto assets. The network offers sub-second finality, opt-in privacy features, and full compatibility with the Ethereum Virtual Machine (EVM). Testing began in October, and the whitepaper describes the ARC token as a native coordination asset that manages governance, validator security, and overall network operations. If successful, Arc would allow Circle to capture more of the infrastructure that USDC currently depends on, reducing its exposure to traditional crypto settlement options on Ethereum and Solana.

Circle also faces direct competition from the issuer of the largest stablecoin, as Tether made a parallel move late last year by launching StableChain. The mainnet went live in December 2025 alongside a native STABLE token used for governance staking and validator incentives. Like Arc, the network focuses entirely on stablecoin transactions (in this case, Tether’s USDT) to support predictable, high-volume real-world settlements. Much like Circle, Tether aims to position USDT as the default base currency in blockchain financial activity.

Even companies outside of the stablecoin industry have sought their own proprietary blockchains. Coinbase operates Base, an Ethereum Layer 2 that stands out as the most advanced in adoption and development among similar efforts. The network funnels users from the Coinbase exchange to on-chain activity, promotes USDC as a primary currency, and removes much of the complexity associated with gas fees. Notably, Coinbase maintains an investment in Circle and played a role in the initial launch of USDC. Additionally, Kraken and Robinhood both have their own blockchain projects, with Robinhood focusing on stock tokenization with the goal of enabling features like global access and 24/7 trading. The New York Stock Exchange also has its own tokenization effort under development.

While stablecoins first gained traction on Ethereum, where they became the primary fuel for the growth and liquidity of decentralized finance (DeFi), the expense of full decentralization may not be justified when distributing centrally issued assets like USDC or USDT. Issuers can apparently benefit from the regulatory benefits of blockchain technology without the need for true decentralization in the current regulatory environment, which critics say lacks integrity or is outright corrupt. This calculation could explain why stablecoin companies and fintech platforms are now creating their own chains rather than continuing to rely exclusively on existing public networks. And stablecoin issuers hold a crucial advantage in the form of the banking infrastructure that backs their dollar-based tokens, allowing them to steer end users to their preferred infrastructure.

While stablecoins devour the crypto market, bitcoin continues to be the most trusted form of truly decentralized digital money. Ethereum therefore occupies a happy medium. It seems too centralized to challenge Bitcoin on the decentralization front, but too decentralized to match the efficiency and control offered by Circle, Coinbase or Tether. Of course, Ethereum proponents argue that the network provides optimal balance and will ultimately capture the vast majority of crypto activity across all segments. In a way, this can be seen as an “all or nothing” bet.

The divide between Bitcoin and stablecoins has become the central fault line dividing the crypto industry into two camps. One side is decentralization-focused cypherpunks who prioritize Bitcoin’s original vision of peer-to-peer electronic money without trusted intermediaries. The other includes adoption-focused fintech entrepreneurs who see stablecoins as the practical path to mainstream integration. That said, opportunities for cooperation also exist. Tether, for example, holds bitcoin as part of the reserves backing its USDT stablecoin. Such arrangements show how synergies can still exist between these two factions.