CRCL vs. ARC: Why Stablecoin Balances Beat Stablecoin Velocity

Key Insights

• Circle and Arc offer two very different exposures to stablecoin growth. CRCL is a bet on USDC balances, reserve assets, and short-term rates, while ARC is a bet on stablecoin activity, transaction volume, and network-level fee capture.
• The stronger investment case is CRCL. Circle’s reserve-yield model is already generating meaningful revenue, including $653 million of reserve income in Q1 2026 alone. ARC, by contrast, still has to prove that activity on Arc can translate into durable tokenholder value.
• ARC’s biggest problem is not adoption, but monetization. Arc may become useful infrastructure, but transaction fees across crypto will trend toward zero over time, and Arc’s own design includes fee discounts and subsidies that could limit protocol-level revenue capture.
• Even aggressive transaction assumptions struggle to compete with Circle’s reserve engine. At $0.001 per transaction, Arc would generate just $258 million of annual gross protocol fees at Visa-scale transaction volume, well below Circle’s current reserve-income run rate.
• ARC’s smaller starting valuation does not solve the core problem. A $3 billion FDV gives ARC more room to outperform, but only if Arc can generate durable, token-accretive revenue in a market where stablecoin settlement fees are likely to remain highly competitive.

Introduction