India is preparing to take a major step in its digital finance journey with the launch of a regulated, rupee-pegged digital asset called Arc, planned for early 2026. The initiative, developed in collaboration with Polygon and fintech firm Anq, aims to offer a homegrown alternative to the growing influence of U.S. dollar–backed stablecoins in the country.
According to people familiar with the project, Arc—short for Asset Reserve Certificate (ARC)—will be pegged 1:1 to the Indian rupee and fully backed by Indian government securities and Treasury Bills. By anchoring the token to sovereign debt, policymakers intend to ensure stability while also boosting demand for government bonds.
Unlike typical stablecoins available to retail users, Arc won’t be open to the general public. Instead, only corporate accounts will be allowed to generate new ARC supply, a move designed to maintain strict compliance with India’s foreign exchange laws and minimize speculative behavior. The token is expected to play a role in institutional payments, programmable transactions, automated systems, and remittance flows.
What sets this project apart is its dual-layer architecture, which blends the capabilities of the Reserve Bank of India’s digital currency (CBDC) with new programmable features that Arc will introduce. In this system, the RBI’s CBDC acts as the settlement backbone (Tier 1), while Arc functions as the programmable token layer (Tier 2), enabling more advanced digital financial tools.
The push for Arc comes as Indian regulators grow increasingly concerned about domestic capital leaking into USD-denominated stablecoins. Officials fear this trend could weaken the rupee and complicate monetary policy, prompting the need for a controlled, rupee-based alternative that keeps liquidity within the country’s financial ecosystem.
By introducing Arc, India hopes to strengthen its grip on digital payments innovation while ensuring that rapid fintech growth doesn’t undermine currency stability or regulatory oversight. Analysts say the token could become a cornerstone of India’s digital infrastructure if rollout stays on track for the first quarter of 2026.
As India accelerates its move into regulated digital assets, Arc may set a new benchmark for how large economies blend blockchain technology with sovereign monetary frameworks—without giving up control.
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