Why does @arc have to regain settlement rights? Why must it do L1?

I have participated in crypto asset audits for funds and can really understand what Circle wants to do.
And what traditional institutions and companies need when using crypto.

1. Asset issuance and redemption closed loop
Remember during audits, the most troublesome issue was the proof of ownership between on-chain and off-chain.
You know those numbers match, but can't explain ownership, transaction purpose, and other issues—it's all up to the client to explain.

Behind USDC are US dollar reserves, and regulations on stablecoins are becoming more detailed and strict.

For Circle, the most important thing is: can on-chain balances, off-chain reserves, banking channels, institutional accounts, and compliance records be connected into a closed loop? Otherwise, no matter how much you talk, you can't prove to regulators that "Mom is Mom."
For institutions and companies, this also helps better handle regulatory, tax, and other issues.

2. Deterministic settlement
A single on-chain stablecoin payment is followed by merchant delivery, bank clearing, corporate revenue confirmation, etc.

Different chains have different finality models, confirmation times, and reorganization risks.

Circle hopes to control finality itself, reducing uncertainty when integrating on-chain payments into real business processes.
So that institutions and companies can confidently use USDC for payments.

3. Compliance interface
I can open it for use, but I need to identify suspicious transactions to meet AML requirements, and have disclosure rights to cooperate with investigations.

If all these capabilities rely solely on wallets, custodians, compliance service providers, and application backends, the process is too long and not very controllable.
Arc directly front-ends some compliance capabilities at the underlying and platform layers.

4. Configurable privacy
Institutions and companies use blockchain for efficiency and immutability, but that doesn't mean they want to make all business information public.
Funds don't want others to see real-time rebalancing, companies don't want competitors to see supplier payments, and payment companies can't expose all customer transaction patterns on-chain.

Arc offers configurable privacy: what can be made public, and what can be disclosed to regulators and auditors.
This is very important for institutions and companies because, in real financial operations, transparency and confidentiality must coexist.

5. Controllable Gas
The costs for companies must be predictable and recordable.
ETH and SOL prices fluctuate too much. If they reserve Gas Tokens in advance, how do they account for price fluctuations? Calculating Gas fees during audits can also be very challenging.

Using USDC as Gas allows institutions and companies to better manage costs.