India Unveils ARC: First Rupee-Backed Digital Asset Built with Polygon & Anq

India is set to debut a new digital asset pegged 1:1 to the Indian rupee, dubbed the ARC (Asset Reserve Certificate), targeting a first-quarter 2026 launch. The initiative, developed by Polygon Labs and fintech firm Anq Finance in collaboration with Indian regulators, aims to stem the flow of domestic liquidity into U.S.-dollar-backed stablecoins and bolster the rupee’s role in on-chain markets.

Project Entails

• The ARC token will be fully backed by Indian government securities and treasury bills, ensuring each unit is collateralised to maintain its rupee-peg.
• Unlike the central bank’s digital rupee (CBDC) issued by the Reserve Bank of India, the ARC is intended as a programmable layer for corporate and fintech use-cases, while the CBDC serves as the settlement asset in a two-tier architecture.
• Only authorised institutional or business accounts will be able to mint or redeem ARC tokens, aligning with India’s regulatory rules around capital-account flows and foreign exchange.

Matters?

• Seeking to anchor liquidity locally: Analysts note that India faces a capital-outflow risk as domestic funds shift into dollar-pegged stablecoins. The ARC aims to offer a home-grown alternative, retaining value on domestic rails.
• Support for debt markets: Because the ARC’s backing is Indian government debt, the structure could create new demand for G-Secs and treasury bills, potentially lowering borrowing costs for the state.
• Programmable finance layer: The project bridges traditional banking/monetary frameworks with blockchain innovation, offering fintechs and enterprises the tools to build payments, remittances, and tokenised-finance solutions on top of a rupee-anchored token.

Next to watch

• Regulatory approval: Final regulatory green-light and infrastructure readiness will be essential. The timeline is subject to change.
• Adoption by financial institutions: Success will depend on banks, payment firms, and fintechs integrating ARC into workflows and rails.
• Technical & compliance design: The token will require robust custody, transparency of reserves, auditability, and compliance controls to ensure trust.
• Competition from dollar stablecoins: Will domestic users and institutions shift from established dollar-linked tokens to the newly minted ARC? That remains open.

FAQs

Q1: What is the ARC token?
A1: The ARC (Asset Reserve Certificate) is a planned digital token pegged 1:1 to the Indian rupee, backed by Indian government securities, and built by Polygon Labs and Anq Finance.

Q2: How is it different from the Digital Rupee (e₹) issued by the RBI?
A2: The Digital Rupee is a CBDC (central bank digital currency) issued by the Reserve Bank of India for official settlement. The ARC is a separate programmable token layer, intended for corporate/fintech use and built by private-sector partners.

Q3: When will ARC launch?
A3: The launch is tentatively scheduled for the first quarter of 2026, though this depends on regulatory approval and infrastructure readiness.

Q4: Who can use or mint the ARC token?
A4: Initially, only authorised business or institutional accounts will be able to mint or redeem ARC tokens; retail access may come later, subject to regulation.

Q5: Why is India creating a rupee-pegged token now?
A5: The motive is to redirect liquidity that has flowed into U.S.-dollar stablecoins, support domestic debt markets, and integrate blockchain-native financial services while retaining monetary control.

Q6: What are the risks?
A6: Risks include execution delays, regulatory shifts, adoption uncertainty, technology/custody challenges, and competition from existing stablecoins pegged to major currencies.