Summary
Arc is a new open Layer‑1 blockchain built by Circle designed to unite onchain innovation with real-world economic activity. With deterministic sub-second finality, fiat-denominated gas fees, and native support for multiple stablecoins, Arc provides a trusted foundation for global commerce and mainstream financial applications, including FX markets. Circle StableFX is an innovative example of an institutional-grade solution built on Arc to deliver 24/7 settlement between the participating fiat stablecoins of the world. The result is a faster, programmable, and more capital-efficient market without the legacy cutoffs, prefunding, or reconciliation overhead of traditional FX.
Arc1 is an open Layer‑1 blockchain purpose-built to unite onchain innovation with real-world economic activity. With deterministic, sub-second finality and fiat-denominated gas fees paid in stablecoins, Arc provides a predictable, real-time settlement layer for digital money, from stablecoins like USDC and EURC to tokenized assets and funds like USYC.2
These design choices make Arc a trusted and powerful foundation for global commerce and mainstream financial applications, including FX markets.
In this post, we’ll explore how Arc is designed to support onchain FX, how it differs from legacy systems, and how Circle StableFX,3 a stablecoin-powered FX engine, shows what’s possible: instant, atomic, and capital efficient cross-currency settlement between fiat stablecoins.
The challenges of traditional FX
Traditional FX is slow, fragmented, and opaque. Multiple intermediaries, cutoff times, and delayed T+2 settlement create friction at every step. Firms face opaque spreads, prefunding costs, and the ever-present risk that one leg of a transaction settles while the other doesn’t, so-called settlement or “Herstatt” risk.
Even with systems like Continuous Linked Settlement (CLS), which delivers Payment versus Payment (PvP) settlement for major currencies, service windows are limited and membership is restricted to the world’s largest banks. In smaller or emerging markets, coverage is often nonexistent.
As a result, traditional FX markets — whether for liquidity management, trading, treasury operations, or cross-border payments — remain costly, slow, and difficult to reconcile.
How Arc supports onchain FX
Arc is built to deliver the best experience for FX, providing what market participants need most: speed and predictability. Settlement on StableFX reduces settlement risk by providing a mechanism so that either both legs of a trade settle or neither does. This mitigates the risk of one side settling while the other fails. Because the Arc blockchain provides deterministic finality, participants receive immediate, irreversible confirmation that the trade has fully settled. And with low-cost gas fees paid in stablecoins, fees can often be paid in a currency that’s already involved in the FX swap (e.g., paying USDC gas fees for a USDC to EURC swap) for simplified accounting.
Further, Arc is designed to support multiple forms of digital money from diverse issuers, including Circle’s USDC,4 EURC,4 and USYC,2 along with other fiat-backed stablecoins and tokenized assets. This broad currency support enables developers to build FX systems on Arc that offer more currency pairs and serve a wider set of FX use cases.
Circle StableFX: onchain FX built on Arc
Circle StableFX is one example of what’s possible on Arc. It’s an institutional-grade FX engine that leverages Arc’s instant deterministic settlement to power onchain conversion between stablecoins backed by different currencies. With StableFX, offchain price discovery meets sub-second onchain settlement finality for fast, low cost, and transparent onchain FX transactions.
StableFX operates with regional fiat stablecoin issuers to provide deep liquidity in key corridors. Builders can convert between any supported fiat-backed stablecoin inside a single API flow, with both legs settling at the same time through PvP settlement.
Here’s how qualified businesses can experience the benefits of StableFX on Arc:
Banks and market makers
Banks and market makers can access a new source of institutional FX flows. StableFX pricing is discovered through an offchain RFQ process familiar to professional desks, while settlement occurs onchain with clear finality and collateralization.
Fintechs and payment service providers (PSPs)
For fintechs and PSPs, StableFX enables global payouts where FX happens in flight (i.e., one stablecoin is swapped for another mid-transfer), risk is minimized by onchain settlement, and deterministic sub-second finality reduces the need to prefund multiple nostros and operational buffers. The result is lower working capital drag and clearer unit economics, with fewer handoffs and less reconciliation overhead.
Enterprises and marketplaces
Enterprises and marketplaces can leverage StableFX to gain an always‑on treasury function. Teams can execute conversions around the clock and settle with finality in seconds, then layer in programmable controls: codified approval workflows, automated hedging rules, and collateral parameters enforced by smart contracts. Trades are registered onchain, creating an audit‑ready record that pairs operational transparency with optional privacy controls designed to support compliance requirements.
The benefits of onchain FX
Because Arc provides deterministic instant settlement and multi-asset support, applications like StableFX can compress FX timelines, reduce one-sided delivery risk, and improve capital efficiency. Idle prefunding can be replaced with configurable settlement windows and smart-contract-based collateral.
And as more forms of tokenized money come to Arc, the number of currency corridors grows without changing your integration surface. You get institutional-grade infrastructure for stablecoin FX with RFQ price discovery and onchain settlement in one secure system.
How StableFX is different from crypto swaps
Decentralized exchange (DEX) swaps work well for onchain assets, including between stablecoins, but institutional FX requires more: identity-aware counterparties, configurable settlement windows, and collateralization.
In this sense, StableFX on Arc goes beyond what retail DEXs are capable of. Arc is designed for institutional workflows with RFQ pricing, PvP settlement, and policy-driven access. Think of StableFX as one example of the FX engines that can be built on Arc’s programmable foundation.
An example of StableFX in action
A payment service provider needs to pay EU merchants in euros from incoming USD balances. Its app calls the StableFX engine to request USDC-to-EURC quotes from approved market makers via RFQ. The chosen quote is registered onchain, collateral is managed per the counterparty agreement, and the trade settles PvP with instant finality. The PSP’s ledger updates in near real time: no overnight cutoffs, no prefunding multiple accounts, and reduced asymmetric leg risk.
Other potential onchain FX use cases Arc can support
- FX trading and perpetuals: Launch institutional-grade spot and perpetual markets across stablecoin pairs with margin, hedging, and PvP settlement built in.
- Treasury operations: Automate daily rebalancing with onchain controls for limits, windows, and collateral with an immutable, auditable ledger.
- Fintech/PSP FX at the edge: Embed RFQ-backed quotes into payment or invoicing flows, then settle PvP onchain to reduce volatility and refunds.
- Tokenized asset markets: Build FX-settled DvP workflows alongside tokenized assets and funds like USYC for collateral and yield management.
- Cross‑border payouts and payroll: Quote, convert, and settle to local stablecoins on predictable schedules with atomic delivery.
Build on Arc and enjoy a new approach to onchain FX
Arc is open, EVM-compatible, and deeply integrated with Circle’s full-stack platform, including USDC, EURC, Mint,5 CPN,6 Wallets, CCTP, and Gateway in addition to StableFX. Together, these form a unified foundation for global, programmable value exchange.
For business leaders and builders, the takeaway is straightforward: FX no longer has to be a back-office bottleneck. With StableFX on Arc, currency conversion becomes an embedded feature of modern financial products — predictable, capital efficient, and always on.
Explore StableFX: Visit the docs to request access.
Build on Arc: Visit the docs to get started.
1 Arc testnet is offered by Circle Technology Services, LLC (“CTS”). CTS is a software provider and does not provide regulated financial or advisory services. You are solely responsible for services you provide to users, including obtaining any necessary licenses or approvals and otherwise complying with applicable laws.
Arc has not been reviewed or approved by the New York State Department of Financial Services.
The product features described in these materials are for informational purposes only. All product features may be modified, delayed, or cancelled without prior notice, at any time and at the sole discretion of Circle Technology Services, LLC. Nothing herein constitutes a commitment, warranty, guarantee or investment advice.
2 USYC is a digital asset token. Each USYC token serves as a digital representation of a share of the Hashnote International Short Duration Fund Ltd. (the “Fund”), a Cayman Islands registered mutual fund. The Fund has appointed Circle International Bermuda Limited (“CIBL”), a Bermuda Monetary Authority licensed digital asset business, as its token administrator, responsible for the management of USYC on behalf of the Fund.
Shares of the Fund and USYC are only available to non-U.S. Persons, as defined under the Securities Act of 1933, as amended. Additional eligibility restrictions may apply. The information provided herein is solely for educational and informational purposes and should not be construed as an offer to sell or a solicitation of an offer to buy any security, financial instrument, or other product.
3 StableFX is offered by Circle Technology Services, LLC (“CTS”). CTS is a software provider and does not provide regulated financial or advisory services. You are solely responsible for services you provide to users, including obtaining any necessary licenses or approvals and otherwise complying with applicable laws. StableFX is a collection of API and on-chain smart contracts that enable data sharing between counterparties to a transaction without intermediation by CTS. CTS’s role is limited to broadcasting information between the relevant parties and to the on-chain smart contract that enables settlement directly between the relevant parties. CTS does not accept or transmit digital assets on behalf of StableFX users. The product features described in these materials are for informational purposes only. All product features may be modified, delayed, or cancelled without prior notice, at any time and at the sole discretion of Circle Technology Services, LLC. Nothing herein constitutes a commitment, warranty, guarantee or investment advice.
4 USDC and EURC are issued by regulated entities of Circle. See a list of Circle’s regulatory authorizations for more information.
5 Circle Mint and money transmission services are provided by Circle Internet Financial, LLC, NMLS # 1201441, and Circle Internet Financial Europe SAS, Electronic Money Institution License No. 17788, when provided in France. A list of Circle’s regulatory authorizations can be found at circle.com/legal/licenses. Circle Mint is currently available only to institutions and is not available to individuals.
6 Circle Technology Services, LLC (CTS) is the operator of Circle Payments Network (CPN) and offers products and services to financial institutions that participate in CPN to facilitate their CPN access and integration. CPN connects participating financial institutions around the world, with CTS serving as the technology service provider to participating financial institutions. While CTS does not hold funds or manage accounts on behalf of customers, we enable the global ecosystem of participating financial institutions to connect directly with each other, communicate securely, and settle directly with each other. CTS is not a party to transactions between participating financial institutions facilitated by CPN who use CPN to execute transactions at their own risk. Use of CPN is subject to the CPN Rules and the CPN Participation Agreement between CTS and a participating financial institution.