Circle to launch USDC on Arbitrum next week.

Circle, the issuer of stablecoins, announced its plan on Thursday, June 1, to launch the native version of its USDC stablecoin on the Arbitrum blockchain network. According to the official announcement, Circle will replace the existing version of USD Coin, which is an Ethereum-based token bridged to Arbitrum, with a native token that runs and resides on the Arbitrum network.

The goal of this shift to Arbitrum is to speed up transactions using cross-chain transfer protocols (CCTPs). CCTPs are responsible for handling the transfer of assets between blockchains and allow users to unify liquidity. The good thing about the CCTP protocols is that they support both Web3 and crypto assets across portfolios.

Circle plans to rename the existing Ethereum-based version of USDC to “USDC.e” ahead of the launch next week on June 8. Post that, the original version shall be listed as “bridged USDC”. On the other hand, the new Arbitrum-based version will get the “USDC” mantle.

The Arbitrum team said that the shift to Arbitrum will enable USDC to move natively to-and-from Ethereum (and other supported chains) in minutes, and there will be no more withdrawal delays. It added that Arbitrum will be working with ecosystem apps to provide a smooth transition of liquidity from bridged USDC to native USDC over time. There will be no immediate changes to the Arbitrum Bridge, and it will continue to operate normally for bridging USDC to and from Ethereum.

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Circle has faced the heat of changing market conditions as the market for stablecoins remains quite subdued after the crypto winter of 2022 and overall market activity. Over the last year, Circle’s market share has been declining significantly. After hitting a high of $55 billion market cap last June 2022, Circle’s USDC has seen its market cap now dropping under $30 billion. In another development, amid the current US debt ceiling showdown, Circle ditched all US Treasury bonds from its USD Coin (USDC) backing reserves. This came just ahead of the US Senate finalizing on raising the debt ceiling. Circle also faced a major blow earlier this year amid the US banking crisis during the fall of crypto-friendly banks Silvergate Capital and Signature Bank. At this time, Circle lost its peg with the US Dollar for some time, leading to massive withdrawals. However, the stablecoin issuer handled the situation well thereafter.

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