India’s First Sovereign-Backed Stablecoin

Polygon and Anq are developing India’s first sovereign-backed stablecoin, fully collateralized by government securities. The project, titled Asset Reserve Certificate (ARC), aims to anchor India’s digital economy to real sovereign value, combining blockchain innovation with financial stability.

• About the Asset Reserve Certificate (ARC)
• System Design: The Twin-Rupee Model
• Objectives & Benefits

About the Asset Reserve Certificate (ARC)

The Asset Reserve Certificate (ARC) is a proposed stablecoin-like model backed entirely by Government of India securities (G-Secs) and Treasury Bills. Each ARC token corresponds directly to these sovereign assets, ensuring that digital issuance reflects real, verifiable reserves.

Unlike speculative crypto assets, the ARC is designed to operate within India’s regulated financial system, providing a safe digital representation of the rupee. Each ARC token is backed 1:1 by sovereign debt, mirroring the value of the Indian Rupee. For every token issued, an equivalent amount of government securities is purchased and held as collateral.

This mechanism ensures full transparency, non-speculative value, and direct integration with India’s financial infrastructure. The ARC’s design links token creation to real-world assets, setting it apart from foreign USD-backed stablecoins.

System Design: The Twin-Rupee Model

The ARC framework operates on a “Twin-Rupee” model that differentiates two complementary layers:

• CBDC (Digital Rupee): Managed directly by the Reserve Bank of India (RBI), it serves as the settlement backbone of the system.
• ARC Tokens: Issued by regulated private players, they function as a programmable, low-cost innovation layer for everyday use cases.

This structure allows private innovation within the boundaries of state oversight which enables fast, programmable payments while maintaining monetary sovereignty and policy control.

Objectives & Benefits

The ARC project aims to strengthen, not disrupt, India’s financial stability. Its primary objectives include:

• Supporting the RBI’s monetary framework through sovereign-backed liquidity.
• Encouraging domestic capital formation by driving demand for government bonds.
• Preventing capital outflow into USD-based stablecoins, keeping liquidity within India.
• Reducing remittance costs and speeding up settlements through digital rails.
• Promoting monetary sovereignty by keeping digital assets anchored to Indian value.

If successful, this model could make India a global reference point for regulated digital money ecosystems. Polygon brings its global blockchain infrastructure and credibility, having previously collaborated with institutions like BlackRock, JPMorgan, and Franklin Templeton on asset tokenization.

Anq provides domestic regulatory expertise and financial inclusion experience, focusing on real-world tokenization for MSMEs and local markets. Together, Polygon and Anq combine global Web3 innovation with India’s regulated financial systems, making ARC both technologically advanced and locally compliant.

If you find any issues in this blog or notice any missing information, please feel free to reach out at yash@etherworld.co for clarifications or updates.

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