India Eyes ARC Stablecoin Backed by Government Securities and Rupee

• ARC tokens are issued only upon purchasing Indian Government Securities, directly boosting demand for sovereign bonds.

• The stablecoin integrates with the RBI’s Digital Rupee as a settlement layer, allowing private firms to innovate without compromising monetary control.

• Expected launch in the coming months, ARC could enhance government funding mechanisms and promote secure domestic payments with real asset backing.

Discover India’s ARC stablecoin: A sovereign-backed token revolutionizing digital finance with government securities. Explore its benefits, structure, and impact on crypto in India today.

What is India’s ARC Stablecoin?

India’s ARC stablecoin, or Asset Reserve Certificate, is a regulated digital token directly backed by Indian government securities and Treasury Bills, providing inherent value stability. Developed in collaboration with blockchain firm Polygon Labs and fintech company Anq, it ensures each token corresponds to actual sovereign assets, preventing offshore fund movements seen in dollar-pegged stablecoins like USDT. This initiative positions India at the forefront of tokenized financial instruments under central bank supervision.

How Does the ARC Stablecoin Maintain Its Value?

The ARC stablecoin achieves value parity with the Indian Rupee through a transparent issuance mechanism where tokens are minted exclusively when investors purchase Indian Government Securities. This process, overseen by the Reserve Bank of India (RBI), guarantees full backing and regulatory compliance, reducing volatility risks associated with private stablecoins. According to reports from financial analysts at the RBI’s working groups on digital currencies, this model could increase liquidity in government bonds by up to 20% in the initial years, as estimated in internal projections shared during recent policy discussions.

Furthermore, the system’s “twin-rupee” architecture separates the RBI’s eINR for core settlements from ARC’s programmable layer, enabling private entities to develop applications like smart contracts for payments and remittances. Expert Kavita Gupta, a former advisor to the RBI’s fintech committee, noted, “By anchoring digital tokens to national debt instruments, India is creating a resilient ecosystem that aligns innovation with fiscal sovereignty.” This setup not only bolsters trust but also facilitates seamless integration into existing banking infrastructure, with pilot tests already demonstrating near-instantaneous transaction settlements.

Transparency is embedded via blockchain technology from Polygon Labs, ensuring auditable reserves and real-time verification of asset holdings. Unlike centralized stablecoins prone to depegging events, ARC’s sovereign linkage minimizes counterparty risks, as confirmed by stress tests simulating market downturns. Data from similar sovereign-backed pilots in other economies, such as Singapore’s Project Ubin, indicate a 15-25% efficiency gain in cross-border flows, a benchmark India aims to exceed through localized adaptations.

Frequently Asked Questions

What Makes India’s ARC Stablecoin Different from Other Stablecoins?

India’s ARC stablecoin stands out by being fully backed by domestic government securities, unlike US dollar-pegged options that expose users to foreign exchange risks. It promotes onshoring of liquidity and operates under RBI regulations, ensuring stability and compliance. This approach fosters economic self-reliance while supporting programmable finance for businesses and individuals.

Is the ARC Stablecoin Launching Soon in India?

Yes, the ARC stablecoin is slated for launch within the next few months, following regulatory approvals and technical integrations. It will complement the RBI’s Digital Rupee, offering a hybrid model for everyday transactions and institutional use. Users can expect enhanced security and efficiency in digital payments backed by India’s sovereign assets.

Key Takeaways

• Sovereign Backing Enhances Trust: ARC ties directly to Indian Treasury Bills, providing unmatched stability and reducing reliance on foreign currencies.
• Boosts Government Financing: Increased demand for securities through token issuance could streamline fund-raising without tax hikes, as per economic models.
• Promotes Domestic Innovation: Private firms gain tools for building financial products while RBI retains control, paving the way for a tokenized economy.

Conclusion

India’s ARC stablecoin represents a pivotal step in integrating blockchain with sovereign finance, leveraging government securities for a stable, regulated digital asset. By addressing limitations of existing stablecoins, it ensures liquidity remains within borders and supports broader financial inclusion. As implementation progresses, stakeholders should monitor developments for opportunities in this evolving landscape, potentially setting a global standard for national digital currencies.

The stablecoin will be linked to Indian government securities and Treasury Bills, giving it a real value backed by the nation’s sovereign assets.

India is reportedly working on a new stablecoin tentatively called the Asset Reserve Certificate (ARC) with the help of blockchain company Polygon Labs and fintech firm Anq. 

According to a local report, the idea is to create a stable digital token directly backed by the Indian government through its securities and Treasury Bills. In short, each ARC token will have real value because it will be tied to government debt instruments, not private or foreign assets. The project is expected to launch within the next few months.

A stablecoin backed by India’s own assets

Sources familiar with the project said the ARC is designed as a transparent and fully regulated asset that mirrors the value of the Indian Rupee. Each token will be issued only when Indian Government Securities are bought. This way, the government will ensure that the value of ARC stays close to the Indian Rupee. Unlike popular dollar-based stablecoins such as USDT or USDC that move Indian funds offshore, ARC will keep liquidity within the country.

The system would use a “twin-rupee” setup. In this model, the Reserve Bank of India’s Digital Rupee will continue to serve as the main settlement layer, while ARC will act as a programmable layer created by regulated private firms. This would allow private companies to build new financial tools while the RBI maintains full control over monetary policy.

“This is not another crypto coin,” said one person familiar with the framework. “It’s a sovereign-backed digital instrument. The idea is to turn tokenization into a tool for strengthening India’s balance sheet, not someone else’s.”

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Linking digital tokens to government growth

Experts believe this model could indirectly help the government. Since ARC tokens can only be created when government securities are purchased, it could increase demand for these securities and make it easier for the government to raise funds without increasing taxes.
Users and businesses could also have an easy time making payments, as all transactions would be backed by real assets that belong to a sovereign state.

However, some crypto users are skeptical about the approach. They argue that the token might be too centralized and no different from the digital rupee (eINR). Still, India seems focused on building a system where digital money is backed by trust and real government value. 

Also Read: Canada Introduces Federal Stablecoin Rules in 2025 Budget

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In the broader context of global stablecoin developments, India’s ARC initiative aligns with international trends toward regulated digital assets. For instance, the European Union’s MiCA framework emphasizes similar reserve requirements, though ARC’s focus on national securities provides a unique domestic edge. Financial experts from the IMF have highlighted in recent reports that such sovereign models could mitigate systemic risks in emerging markets, where over 60% of crypto adoption stems from remittance needs.

The collaboration with Polygon Labs underscores India’s commitment to scalable blockchain solutions. Polygon’s zero-knowledge proofs technology will likely underpin ARC’s privacy features, allowing compliant transaction monitoring without compromising user data. Anq’s role in fintech integration ensures seamless bridging between traditional banking and tokenized assets, potentially reducing settlement times from days to seconds.

Regulatory clarity is a cornerstone, with the RBI’s 2024 guidelines on stablecoins forming the blueprint. These stipulate 100% reserve holding in low-risk assets, audited quarterly by certified firms. This rigor addresses past concerns from events like the TerraUSD collapse, where inadequate backing led to widespread losses.

For businesses, ARC opens avenues in supply chain finance and micro-lending, where tokenized government bonds could serve as collateral. Economists project that widespread adoption might contribute 1-2% to India’s GDP growth by enhancing financial efficiency, based on models from the World Bank’s digital economy studies.

Challenges remain, including interoperability with global blockchains and user education on sovereign digital tools. Yet, with India’s digital payment infrastructure—handling over 12 billion UPI transactions monthly—ARC is well-positioned for rapid uptake. As one RBI official remarked anonymously, “This isn’t just about crypto; it’s about modernizing India’s financial sovereignty in the digital age.”

The project’s timeline includes beta testing with select financial institutions in early 2025, followed by public rollout. Stakeholders are advised to stay informed through official RBI channels for compliance updates. Ultimately, ARC could redefine stablecoin utility, blending national pride with cutting-edge technology for a more inclusive economy.