India’s ARC Stablecoin Set to Launch in Q1 2026, Backed By the Rupee

The ARC stablecoin will be 1:1 backed by the Indian rupee, ensuring stability and transparency.

It aims to curb capital outflows, especially toward dollar-backed stablecoins.

ARC will complement the RBI’s CBDC within a two-tier framework, ensuring regulatory compliance and financial sovereignty.

India is preparing to launch its Asset Reserve Certificate (ARC) stablecoin by the first quarter of 2026. Backed 1:1 by the Indian rupee, ARC will aim to bolster the country’s domestic economy by preventing liquidity outflow into foreign-backed stablecoins. The initiative, developed by Polygon and Anq, promises to create a regulated digital asset ecosystem that aligns with India’s existing financial structures.

A Sovereign Digital Token

ARC will be a fully collateralized stablecoin designed to maintain the value of the Indian rupee. Each ARC token will be minted only when issuers acquire cash or equivalent assets, including government securities, fixed deposits, or cash balances. This setup ensures transparency, safety, and adherence to regulatory standards. The token’s value will be tied directly to the rupee, providing a stable digital asset option within India’s borders.

One of ARC’s key goals is to curb capital outflows, especially towards dollar-backed stablecoins. With concerns over significant liquidity shifts following the legalization of dollar-backed stablecoins in the U.S., India seeks to maintain its economic stability by keeping liquidity and innovation within the country. The ARC stablecoin will help facilitate payments for business transactions without triggering full convertibility of the Indian rupee, thus ensuring compliance with India’s foreign exchange regulations.

Complementing the RBI’s Digital Currency

ARC will function under a two-tier system that would complement India’s Central Bank Digital Currency (CBDC) project, which is being executed by the Reserve Bank of India (RBI). The RBI’s CBDC will function as the final settlement layer and guarantee central supervision, thus protecting India’s monetary sovereignty. Meanwhile, the private sector will be responsible for the RTC platform, which will promote innovation in payment technologies and remittance systems while complying with regulatory requirements.

The ARC ecosystem will implement Uniswap v4 protocol hooks to limit swapping of tokens to only the permissioned addresses. Such a step makes sure that token movements are in accordance with the regulations, stopping unauthorized users and, at the same time, increasing openness. The minting of ARC tokens will be restricted to business accounts only according to the rules of the Liberalized Remittance Scheme (LRS). This not only helps but also ensures control over foreign currency transactions while being in compliance with Indian financial laws.India’s move towards a sovereign stablecoin comes amid growing concerns about the impact of foreign-backed stablecoins on emerging economies. The U.S. government’s regulatory actions, particularly the GENIUS Stablecoin Act, have raised alarms about liquidity shifting away from markets like India. India’s ARC token aims to mitigate these risks and support its domestic economy by ensuring that financial innovation remains within its borders.