Parvati Anilkumar | Trade Brains
5 Feb 2026
This article discusses the proposed ARC (Asset Reserve Certificate), who is reportedly developing it, how it works, and the key concerns surrounding its launch in India.
There is currently no official confirmation from the Indian government or the RBI. Several media reports and online discussions have suggested that India may launch a rupee-backed stablecoin in the first half of 2026. These reports claim that Polygon and fintech firm Anq Finance are working on the project.
However, no official announcement has been made by the Reserve Bank of India (RBI) or the Government of India, making the timeline uncertain.
Polygon is an Ethereum scaling network that provides blockchain infrastructure, while Anq Finance is reportedly a domestic fintech firm specialising in tokenisation and MSME financing.
What Is ARC (Asset Reserve Certificate)?
The proposed token is reportedly called ARC, which stands for Asset Reserve Certificate. It is claimed that ARC may be backed by government securities and Treasury bills. ARC is expected to be pegged 1:1 to the Indian Rupee. The reserve assets would represent the value of government securities held in custody.
ARC is expected to be a regulated digital asset rather than a speculative cryptocurrency. Its purpose would be to maintain price stability and improve transparency, unlike many volatile crypto assets.
Why Is a Rupee-Backed Stablecoin Needed?
Most widely used stablecoins today, such as USDT and USDC, are backed by the US dollar. This leads to heavy dependence on dollar-based digital assets.
A rupee-backed stablecoin could:
Reduce US dollar dominance in digital transactions
Promote the use of the Indian rupee in blockchain ecosystems
Improve trust through government-backed reserves
Despite India’s cautious stance on cryptocurrencies, such a model could support regulated digital finance.
How Does ARC Work?
ARC is expected to operate as a token on the Polygon blockchain.
Transactions on Polygon are relatively fast and low-cost, making the token suitable for everyday use.
The proposed mechanism works as follows:
The issuer purchases government bonds.
Based on these reserves, new ARC tokens are minted.
When users redeem ARC, the process is reversed and tokens are burned.
This system ensures that every token in circulation is backed by real financial assets.
Compliance and Regulatory Framework
This token is expected to comply with foreign exchange, KYC, and AML regulations. To mint and redeem ARC, participating businesses would likely need regulatory approval and licences.
Some reports suggest that smart contract-based systems, possibly integrated with decentralised exchanges, may be used
Transfers may be programmed to occur only between verified and approved parties. This would ensure that ARC remains within India’s regulatory framework.
ARC vs Digital Rupee
ARC is reportedly backed by sovereign debt instruments, not directly by RBI-issued cash. ARC would be backed by government securities rather than central bank liabilities.
This makes ARC different from the Digital Rupee (CBDC), which is directly issued by the RBI. However, both systems remain centralised and permission-based.
Potential Challenges and Concerns
1. Centralisation and Control
Critics argue that ARC may conflict with decentralised finance principles. It could become another centrally controlled digital currency, similar to the Digital Rupee, requiring government approval for usage.
2. Foreign Exchange Restrictions
India follows partial capital account convertibility.
This means:
The rupee cannot be freely used abroad
Overseas investments remain restricted
As a result, ARC may face limitations in international usage.
Any non-compliant transactions would need to be blocked to meet FEMA and RBI regulations. 3. Market and Liquidity Risks
Since it is backed by bonds, its value may be affected by interest rate movements.
Bond-backed reserves may face:
Price fluctuations
Liquidity constraints
Higher redemption costs
Large-scale redemptions could put pressure on reserve management.
4. Regulatory Uncertainty
Indian regulators are still developing a clear framework for crypto and digital assets. Although reports suggest a 2026 launch, regulatory clarity is still evolving. Without proper guidelines, implementation may be delayed.
While reports suggest that ARC could become India’s first rupee-backed stablecoin, there is currently no official confirmation.
If launched successfully, ARC could:
Strengthen the digital rupee ecosystem
Reduce reliance on dollar-based stablecoins
Promote regulated blockchain finance
However, challenges related to regulation, centralisation, liquidity, and foreign exchange laws must be addressed before large-scale adoption becomes possible.