In a groundbreaking collaboration, Polygon and fintech startup Anq are set to revolutionize the Indian financial landscape with the launch of the Asset Reserve Certificate (ARC). This regulated digital token, backed by Indian government securities, aims to bolster the Rupee, deepen financial markets, and seamlessly integrate within India’s monetary framework through innovative blockchain technology.
Unveiling the Asset Reserve Certificate (ARC)
The ARC is not just another cryptocurrency; it is a regulated, non-speculative digital asset that mirrors the value of the Indian Rupee, backed one-to-one by sovereign debt including Government of India securities and Treasury Bills. Its innovative design ensures compliance with the Reserve Bank of India’s monetary framework, providing the safety and transparency that traditional cryptocurrencies often lack.
“This is not another crypto coin. It’s a sovereign-backed digital instrument,”
With the ARC positioned as a secure avenue for digital transactions, it promises to provide individuals and organizations with a reliable form of currency that is deeply embedded in the Indian economy, allowing it to operate entirely within the nation’s financial perimeter.
How Does the ARC Work?
The creation of ARC tokens is intricately linked to the purchase of government securities (G-Secs), ensuring that each token corresponds to actual government assets. This linkage not only protects liquidity from moving offshore—an issue frequently faced by dollar-based stablecoins—but also fortifies domestic financial structures by fostering increased demand for Indian sovereign securities.
According to industry insiders, this innovative mechanism has the potential to reform the borrowing landscape for the government, making it easier and cheaper to raise funds domestically. By creating a consistent demand for government securities, the ARC stands to bolster India’s fiscal capacity significantly.
The Potential Economic Benefits
The implications of the ARC extend far beyond mere digital transactions. One of its primary goals is to strengthen the Indian Rupee, ultimately creating a more robust bond market. By generating continuous demand for government securities, it aims to streamline domestic government borrowing.
“It gives you the utility of a stablecoin but without the volatility or foreign exposure,”
Stability and trust are critical elements that this initiative seeks to offer to individuals and businesses alike.
Moreover, the ARC could lower remittance costs significantly and enhance settlement speeds for transactions, setting it apart from traditional and speculative crypto assets. This not only benefits everyday consumers but also aligns with India’s goal to foster financial inclusion in all sectors of the economy.
A Twin-Rupee System: Complementing India’s CBDC
The ARC is also conceptualized as a complementary payment layer to India’s central bank digital currency (CBDC), creating a “Twin-Rupee” architecture. In this interconnected system, the CBDC serves as the settlement backbone under the monitoring of the Reserve Bank of India, while the ARC facilitates faster and programmable transactions.
This dual-layer approach promises to make financial transactions more efficient, enabling easier access and greater flexibility for users. With enhanced transaction speeds and lower costs, the ARC stands to redefine how financial operations are conducted within the country.
Expertise Behind the Innovation
Driving this vision are two industry leaders: Polygon, known for its global credibility in the blockchain field, and Anq, which brings a nuanced understanding of the Indian regulatory landscape. Polygon has successfully managed regulated tokenization projects for renowned companies like Franklin Templeton and JPMorgan, establishing itself as a pivotal player in the broader market, particularly in stablecoin transactions.
On the other hand, Anq—the Bengaluru-based fintech startup—contributes its deep expertise in developing regulatory frameworks aimed at improving liquidity for Micro, Small, and Medium Enterprises (MSMEs). Together, they aim to create a compliant, transparent model that leverages blockchain technology to modernize Indian finance while preserving the integrity of its monetary system.
Envisioning a Future of Financial Integrity
If successful, the ARC could simplify not just remittances but entire transactions through a regulated foundation for an Indian stablecoin. As both developers share their insights on future developments, Sandeep Nailwal, co-founder of Polygon, shared at the ET World Leaders Forum that the aim is to transform tokenization into a tool for enhancing India’s balance sheet. The intent is clear: to harness the power of digital tokens to stabilize and strengthen the Indian economy, while simultaneously putting it on the global financial map.
