What Is ARC? India’s First Regulated Rupee Stablecoin and Its Answer to USDT, USDC

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Key Takeaways

• India is preparing to launch ARC, a rupee-backed, fully regulated private stablecoin.

• ARC is designed to coexist with the RBI’s digital rupee (CBDC), not compete with it.

• The initiative aims to curb reliance on foreign stablecoins and keep liquidity onshore.

• The ARC rollout is expected as early as Q1 2026.

After years of cautious testing with its central bank digital currency (CBDC), the digital rupee, India is now preparing to roll out ARC, which is short for Asset Reserve Certificate.

ARC is a regulated, rupee-backed stablecoin created by the private sector, which signals India’s most serious push yet toward a two-layer digital money system, one that keeps the Reserve Bank firmly in control of settlement while allowing private firms to build faster, smarter, more flexible payment rails on top of it.

Here’s everything you need to know about ARC.

ARC: India’s Answer to Dollar Stablecoins

ARC is structured as a fully collateralized, INR-pegged digital asset, backed by cash equivalents such as Government Securities (G-Secs), Treasury Bills (T-Bills), and fixed deposits.

Government officials and industry partners describe it as a way to ensure India maintains monetary control as crypto usage accelerates.

Rather than competing with the Reserve Bank of India’s digital rupee, ARC is designed to sit on top of it.

India’s model creates two distinct layers:

• Settlement Layer — The CBDC: The RBI’s digital rupee continues to handle final settlement and monetary oversight.

• Interaction Layer — ARC: ARC operates on blockchain rails as the programmable layer used for payments, remittances, DeFi experimentation, and business transactions.

Every ARC token is minted only after an equivalent deposit of INR reserves, keeping the system fully backed and compliant with India’s capital-control rules.

The project is being developed by Polygon and Indian fintech firm Anq, which has worked closely with regulators on integrating blockchain systems into the rupee framework.

What ARC Is Designed to Fix

The ARC initiative is rooted in a concern shared by India and other emerging markets: the massive flow of capital into dollar-pegged stablecoins during crypto bull markets.

Foreign stablecoins dominate India’s crypto trading volumes, indirectly draining rupee liquidity. A domestic stablecoin aims to reverse that trend.

ARC also fits into India’s long-term digital-economy vision:

• Strengthen INR liquidity: ARC keeps value inside the domestic financial system, instead of routing trade through offshore USD pools.

• Support government securities demand: Because ARC must be backed by G-Secs, it naturally increases demand for sovereign debt.

• Enable programmable payments: ARC introduces smart-contract-driven transactions, something the CBDC alone does not currently offer.

• Lower costs for remittances and settlements: A blockchain layer lets payments clear in seconds, not days, and at significantly lower fees.

Edul Patel, CEO of Mudrex, said the arrangement shows how CBDCs and private stablecoins “can reinforce each other,” combining central-bank credibility with the speed and programmability of modern crypto rails.

“With rupee-backed stablecoins, the ARC project demonstrates that CBDCs and stablecoins can not only co-exist but also reinforce each other. It brings together the credibility of a CBDC as the core settlement layer with the low-cost, real-time efficiencies of stablecoins, unlocking DeFi use cases and smart-contract capabilities.”

When Does ARC Launch?

While the Reserve Bank of India has not announced a formal rollout date, industry sources say the operational framework is nearly complete.

The target window is Q1 2026, though regulatory approvals are still required.

The timing coincides with India’s ongoing CBDC pilots, which began in 2022 and now include wholesale banks, retail trials, and limited offline-payment testing.

If ARC launches on schedule, India would become one of the first countries in the world to deploy a regulated private stablecoin designed to work in tandem with a CBDC.

The Road Ahead

ARC’s impact will depend on adoption, particularly by banks, payment companies, and fintech platforms.

The first phase limits ARC issuance to corporate and institutional accounts, meaning retail usage will come later.

Still, analysts say ARC could reshape India’s digital-asset landscape by:

• Making on-chain rupee transactions routine.

• Reducing reliance on offshore stablecoins.

• Lowering costs for cross-border money flows.

• Positioning India as a leader in regulated, non-USD stablecoins.

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