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- India to launch a regulated, rupee-pegged digital asset, ARC, in early 2026 to challenge dollar-backed stablecoins.
- The ARC will work with RBI’s CBDC, forming a 2-layer digital payments system for automated transactions.
- Backed by Indian government securities, the ARC aims to maintain financial stability and strengthen the rupee.
India will roll out a regulated, rupee-pegged digital asset in early 2026. The new asset will be the Asset Reserve Certificate (ARC) that will be pegged 1:1 to the Indian rupee. The ARC was created by Polygon and fintech company Anq with the goal of taking over control of dollar-backed stablecoins in India.
The ARC will collaborate with the Central Bank Digital Currency (CBDC) of the Reserve Bank of India. The CBDC of the RBI will be the formal settlement infrastructure. Automatic transactions and programmable payments will be facilitated by the ARC. The two systems combined will create a 2-layer digital payments infrastructure, according to sources.
India’s ARC Tackles Concerns Over USD Stablecoins
However, the objective of the ARC is to maintain liquidity in India’s financial system. The increased usage of USD-backed stablecoins has been attained as a cause of concern by Indian policymakers. While, they fear that this would undermine the rupee and complicate the monetary policy of India.
The ARC will be heavily supported by Indian government securities and Treasury Bills. This will make it stable in its prices and underpin it with the Indian monetary policy’s national policy. The support will also raise the demand of the government debt, and the financial stability of the country will be supported.
Source: EthNews
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ARC to Facilitate Digital Payments and Remittances
The program has been organized in a two-tier system. The first tier is the CBDC of the RBI that deals with official settlements. The ARC, Tier 2, offers digital remittances, payments, and other financial services. So far, this two-layered system will be intended to encourage the emerging digital economy in India.
Moreover, only the corporate accounts will be permitted to issue ARC tokens. This rule aims to ensure compliance with India’s foreign exchange regulations. Additionally, it will prevent individual speculation and protect against market fluctuations.
However, the move toward digitalization of the financial system in India is an important move. India would like to maintain the control of the liquidity and capital flows by providing a domestic alternative to the dollar-backed stablecoins.
However, the ARC will be an important digital asset in the digital assets ecosystem of India and will help the development of fintech and reinforce the digital presence of the rupee.
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