India is now working toward introducing a fully collateralized, rupee‑pegged stablecoin called the Asset Reserve Certificate (ARC) in the first quarter of 2026, according to multiple sources. The project is being developed jointly by Polygon, the Ethereum scaling network, and Anq, a Bengaluru-based fintech firm.
Stablecoins like USDC and Tether have gained international recognition for facilitating cross-border transactions and decentralized finance (DeFi) initiatives. Many countries are experimenting with sovereign digital currencies, and India’s ARC is in line with this trend.
ARC tokens will be traded at parity with the Indian rupee and will only be issued when fully backed by cash, fixed deposits, government securities, or other cash-equivalent assets.
The new development follows growing interest in digital currencies worldwide and reflects India’s push to strengthen its digital payments infrastructure while keeping financial flows within its borders.
The RBI’s CBDC shall serve as a settlement layer for the ARC token
Insiders said ARC aims to curb liquidity flowing into dollar-backed stablecoins so that capital and innovation can be retained domestically and also to enhance demand for government debt instruments. The proposed token will also complement India’s Central Bank Digital Currency (CBDC) by providing a regulated layer for private-sector participation.
Additionally, the RBI’s CBDC serves as the ultimate settlement layer, ensuring both monetary sovereignty and financial security. The token will also comply with India’s partial convertibility framework, enabling business transactions. The emphasis on compliance in this application can ease the supervisory burden, which could potentially serve as a model for regulators establishing public–private stablecoin systems in other jurisdictions.
Meanwhile, ARC token minting will be authorized exclusively for business accounts to comply with LRS requirements applicable to individual FX transactions. In addition, the platform for the asset will include Uniswap v4 protocol hooks. Token swaps are, however, limited to whitelisted addresses to preserve control and compliance.
Rising capital outflows to dollar-backed stablecoins, encouraged by the Trump administration’s pro-crypto stance, have prompted India to pursue its own sovereign stablecoin.
Nevertheless, the approval of dollar-backed stablecoins under the GENIUS Stablecoin Act has given rise to fears that huge liquidity may be sucked out of emerging markets. Standard Chartered warned that deposits in these banks could decline by as much as $1 trillion over three years as savers shift to stablecoins. The bank also anticipates that the worldwide stablecoin market will reach $2 trillion, with nearly two-thirds of that demand coming from emerging economies.
While stablecoins pose a threat to standard deposits, the bank also explained that they could make remittances cheaper and payments faster. Still, the institution cautioned that banks could be in trouble if authorities cannot keep up with the wave of stablecoins.
Polygon-Anq partnership pairs Ethereum technology with local regulatory knowledge
Polygon brings its Ethereum infrastructure and scaling tools to the table in this partnership. Meanwhile, Anq introduces India-focused fintech capabilities and regulatory compliance knowledge needed to produce the ARC token.
If launched in Q1 2026, ARC can become a core part of India’s digital finance ecosystem, offering flexible, programmable payments, remittance services, and regulated access to debt markets.
The ultimate success of ARC would hinge on its adoption by banks, fintechs, and regulators, as well as its impact on the global economy, particularly in relation to financial policy, U.S. policy, and the dollar-backed stablecoin market.
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