ARC, the token of Circle’s Arc network: created and privately sold, but not yet for sale

Project Research Dossier: ARC, the token of Circle’s Arc network

kelvin.eth (squad member) and tchiweb3 (squad leader) | Status checked 25 October 2026 | Primary sources only. Research, not investment or legal advice. Source key. [WP] Circle, “ARC: The Native Asset of the Economic OS,” May 2026 (whitepaper). [8K-1] Circle Form 8-K filed with the US Securities and Exchange Commission (SEC), 11 May 2026. [8K-2] Circle Form 8-K, second closing, 29–30 June 2026. [PR] Circle press release, 16 Sept 2026. [FAQ] arc.io/arc-token-whitepaper. [GH] github.com/circlefin/arc-node and Arc House post, 9 Apr 2026. Items marked (authors) are our own arithmetic or analysis, not Circle’s statements. Eligibility basis (no public raise, no active token launch) Circle’s latest documents we reviewed (16 Sept 2026) say ARC is not publicly available or traded [PR][FAQ], and our searches on 25 Oct 2026 found no announcement of a public launch. Its two SEC filings describe private placements to institutional investors (Regulation D, Rule 506(b) in May; Rule 506(c) in June) [8K-1][8K-2]. Rule 506(c) permits public advertising but only to verified accredited investors. Circle created the full 10 billion supply in Sept 2026 but states this “is not a commitment to publicly launch ARC” [PR]. Reviewers should weigh the private presale and the unreleased supply when judging eligibility; both are disclosed here openly.

1. Goal: what it builds and why it matters

Arc is a public blockchain (a “Layer-1”, meaning a base network) built by Circle, issuer of the USDC stablecoin. Circle calls it an “Economic OS” for payments, currency exchange, tokenized assets and payments by AI agents [WP §II][PR]. Fees are paid in USDC, not ARC [PR]. Mainnet went live on 16 Sept 2026 run by an approved list of validators (“Proof of Authority”); a later switch to “Proof of Stake”, where token holders lock tokens to secure the network, is being explored for 2027 [PR]. ARC is meant to be the “coordination asset”: staking, votes on fees and inflation, conversion of fees into ARC with part burned (permanently destroyed), and fee discounts [WP §III–V]. Why it matters: Circle is the first listed company to mint a token for a new base chain [PR]. Key point: the token’s role is design on paper until Proof of Stake arrives; today the network runs without it. 2. Tokenomics Item What the primary sources say Supply 10,000,000,000 ARC initial supply [WP §V]; all minted Sept 2026 [PR]. Fully diluted valuation (FDV: value if every token existed and traded) $3.0 billion, implied by the $0.30 presale price (10bn x $0.30) [8K-1]. This is a negotiated private price, not a market price. Circulating supply and value None public. The token does not trade, so no circulating value can be stated. Any figure quoted online is not from Circle. Allocation Ecosystem 60% (6.0bn: token sales, grants, growth, participation); Circle 25% (2.5bn); Long-term reserve 15% (1.5bn) [WP §V]. Presale 740m tokens (May) + 67.5m (June) = 807.5m, or 8.075% of supply; about $242.25m raised (authors' sum of [8K-1] and [8K-2]). Led by a16z crypto [8K-1]. Buyers have repayment rights in specified circumstances, including if tokens are not delivered, if Proof of Stake is not live by 8 May 2028, or if compliance conditions fail [8K-1]. Vesting and cliffs Presale buyers: may not sell or transfer for at least one year after the date Arc moves to Proof of Stake (the “Transition Date”); further transfer limits may apply until four years after it [8K-1][8K-2]. Circle, ecosystem and reserve: no schedule published; the whitepaper says exact unlock and release schedules “will be announced in the coming months” [WP §V]. Emissions (new tokens) New ARC issued at an annual rate of about 2–3% at first (base not stated), declining on a schedule governance can change; goal is “inflation neutrality” with no fixed timeline [WP §V]. If applied to the 10bn initial supply, roughly 200–300m tokens a year (authors). Burn Fees are converted to ARC; part pays validators and stakers, part is burned; the split is set by governance [WP §V]. Figure 3 is expressly “not projections or commitments.” 3. Unlock and dilution risk: what hits supply, and when No dated unlock exists, so nothing can honestly be placed on a calendar. What can be shown is the shape of the risk. The numbers in the middle column are illustrations we chose; only the token counts come from Circle. Source of new supply Illustration (authors; not Circle data) What we do not know Presale buyers: 807.5m (8.1%) Earliest sale is one year after the Proof of Stake switch (2028 or later if the switch comes in 2027) [8K-1]. If then released as one cliff while 1.0bn tokens circulate: supply +81% at once. If released evenly over 12 months: about 67m a month, about 6.7% of that base monthly. Cliff or gradual release after the lock-up; launch date; circulating base Circle: 2.5bn (25%) Held by the issuer, which also runs ecosystem programs [WP §V]. Any schedule or sale restriction (Circle says it will take part in staking and governance [WP]) Ecosystem: 6.0bn (60%), includes “token sales” [WP] A future public sale is expressly contemplated. Size, timing, who controls release Emissions: 2–3% a year About 200–300m tokens a year if the rate applies to the initial supply. Start date, decay speed, and the base the rate applies to Scale Each 1% of supply = 100m tokens = $30m at the presale price. If 5% / 10% / 20% of supply circulated at $0.30, circulating value would be $150m / $300m / $600m against FDV of $3.0bn. Actual circulating share at launch 4. Team verification: verifiable versus marketing Verifiable (checked against a primary document) Marketing or unverified Issuer Circle Internet Group, Inc. (NYSE: CRCL) files with the SEC; the two 8-Ks are signed by its Chief Financial Officer (Jeremy Fox-Geen) and its General Counsel (Sarah K. Wilson) [8K-1][8K-2]. Arc is run by Arc Network Services LLC, a Circle subsidiary, which says Arc and ARC have not been reviewed or approved by any regulator, including the New York State Department of Financial Services [FAQ]. Founding validators (BlackRock, DTCC, ICE, Mastercard, Visa and others) are described as a phased rollout, “will have” [PR]; confirm against the live validator list. Code is public: github.com/circlefin/arc-node was open-sourced on 9 Apr 2026; a bug bounty with prizes ran on HackerOne from 9 Apr to 1 Jun 2026; releases are numbered [GH]. “100+ institutions”, “700 million testnet transactions”, “75,000 community members” are Circle’s own claims with no independent proof [PR]. The whitepaper thanks five named people (Sanket Jain, Gordon Liao, Gagan Mac, Rachel Mayer, Chris Ries) without stating roles [WP]. Circle says the bounty complements “external audits” [GH], but we did not locate an audit report or the ARC token contract address. Open testnet code is not an audit of mainnet or token code. 5. Key risks Type Risk Legal and regulatory Mixed messages. Circle sold 807.5m tokens under SEC-filed purchase agreements with refund rights [8K-1][8K-2], while its own FAQ says no decision has been made on whether a token will be developed [FAQ]. Classification. The whitepaper says ARC benefits do not depend on Circle’s efforts and that ARC is not a security [WP][FAQ], yet, under the initial model, Circle has the final say on protocol upgrades, validator membership, incident response and treasury [WP Table 4], and calls ARC a “digital commodity” [PR]. A regulator weighing whether this is an investment contract (money put in, profit expected from others’ work, the US Howey test) could point to that tension (authors’ analysis). Nigerian and other non-US treatment is not addressed in Circle’s documents. Governance Under the initial model token holders decide only economic settings (fees, inflation, burn); Circle decides the rest, including who may validate [WP Table 4]. The whitepaper intends this authority to shift to holders over time [WP §VI]. Circle holds 25% and administers ecosystem programs, so voting power may concentrate. Who controls the 60% ecosystem tranche is not stated. Incentives Presale buyers paid $0.30 and hold a repayment right if Proof of Stake is not live by May 2028 [8K-1]; no comparable right is disclosed for anyone else. Their sale restrictions run from the Proof of Stake switch, but no schedule is published for Circle’s 25% or the ecosystem and reserve tranches, so insider exits cannot be assessed. New issuance dilutes holders who do not stake. Technical Per Circle’s documents, Proof of Stake, fee conversion into ARC and burns are proposed designs, not live features [WP][PR]; demand for ARC would rest on them (authors). Audit status of the token code is unverified. Execution Circle says features may be “modified, delayed, or cancelled” [PR][WP]. Proof of Stake is only “explored” for 2027 [PR], against a refund deadline of May 2028 [8K-1].

6. Disclosure

Question kelvin.eth tchiweb3 Holds ARC, presale rights or other ARC exposure? NO NO Holds Circle (CRCL) shares or related assets? NO NO Receives payment or benefit from Circle, Arc or any party named here? NO NO

Sources (all primary) and verification log [WP] arc_whitepaper.pdf, linked from the page below (May 2026). [FAQ] / [WP] https://www.arc.io/arc-token-whitepaper [8K-1] https://www.sec.gov/Archives/edgar/data/0001876042/000187604226000148/crcl-20260511.htm [8K-2] https://www.sec.gov/Archives/edgar/data/0001876042/000187604226000205/crcl-20260629.htm [PR] https://www.circle.com/pressroom/circle-launches-arc-mainnet-an-economic-operating-system-for-the-internet [GH] Arc House post (9 Apr 2026): https://community.arc.io/public/blogs/arc-opens-its-code-its-nodes-and-a-formal-path-to-break-it-before-mainnet [GH] Repository: https://github.com/circlefin/arc-node