India Plans for Launch of Debt-backed ARC Token in Q1 2026

India is planning on releasing a fully collateralized rupee-pegged ARC token in Q1 of 2026. The Asset Reserve Certificate (ARC) was developed in collaboration between India-based tech fintech firm Anq and Polygon, an Ethereum infrastructure development and scaling giant. When launched, the token will be positioned as a regulated, domestically anchored alternative to foreign-backed stablecoins.

Rupee-Pegged ARC Token

Each ARC token will maintain a 1:1 peg with the Indian rupee and will be minted only when the issuers acquire corresponding cash or cash equivalents such as government securities, cash balances, or fixed deposits. This model ensures high transparency and minimizes risks associated with undercollateralized or offshore stablecoins.

By anchoring token issuance directly to domestic assets, the ARC aims to stop liquidity leakage into dollar-backed stablecoins. Instead, the model ensures that liquidity circulates in India’s financial ecosystem while potentially boosting demand for public debt instruments.

The ARC token is expected to operate alongside and not replace the Reserve Bank of India’s Central Bank Digital Currency (CBDC). Under a proposed two-tier model, the RBI’s digital rupee remains the sovereign settlement layer, while the ARC functions as a private-sector-led interaction layer enabling programmable transactions, payment solutions, and remittance systems with a regulatory-compliant environment.

This approach preserves monetary sovereignty while allowing tech firms to build advanced financial tools atop a compliant framework. The ARC will adhere to India’s partial convertibility regime. While the Indian rupee is freely convertible for currency account transactions, capital account convertibility remains restricted. The token will facilitate business-related payments without expanding capital account freedoms.

More importantly, only business accounts will be permitted to mint ARC tokens, ensuring alignment with the liberalized Remittance Scheme (LRS). Additionally, ARC’s ecosystem will integrate Uniswap v4 protocol hooks to restrict token swaps solely to whitelisted users.

India’s plans to launch an ARC appear during growing warnings about capital outflows into U.S. dollar-pegged stablecoins. The efforts have increased globally following the U.S. GENIUS Stablecoin Act, which legalizes such assets. Standard Chartered recently projected that emerging market banks could face deposit outflows approaching $1 trillion over the next three years.