Trading Begins for New Treasury-Based, SEC-Registered Digital Security

Arca launches Ethereum-based trading for new fund based on shares in U.S. Treasury securities.

Per a July 6 announcement from the firm, Arca Labs has begun trading for its new digitized security, the ArCoin.

The ArCoin runs on the Ethereum blockchain and represents shares in Arca’s U.S. Treasury Fund, which is registered with the Securities and Exchange Commission and is composed of 80% U.S. Treasury securities.

History of the fund and the new token

Arca’s successful filing dates to this past April. However, the firm has been working on the product for two years alongside law firm Morrison & Foerster. 

The fund is tradeable through a specific portal, which facilitates peer-to-peer transactions. However, for the time being, ArCoin is unavailable on any major securities exchanges. In a prospectus filed with the SEC in April 2019 for the then-developing ArCoin, Arca explained that:

“In the future, Arca UST Coins may be tradeable on a public decentralized or centralized electronic exchange platform that is registered with the SEC as an alternative trading system (“ATS”), although there is no guarantee any such systems or platforms will be available.”

Jerald David, president of Arca Capital Management, which oversees Arca Labs, told Cointelegraph of their motives for using Treasury-based assets: 

“We wanted to create an instrument that invests in traditionally lower-volatility assets and the U.S. Treasury’s were an ideal choice from that perspective.”

Future offerings

Security tokens face a tricky landscape in the United States, where regulators are skeptical enough of cryptocurrencies in general that they apply intensive scrutiny blockchain securities trading. The use of Treasury assets may well have caused the SEC to look on Arca’s offering more favorably. 

The Treasury Funds are not the end of the line, however. “The Arca U.S. Treasury Fund is the first of a suite of products that Arca Labs seeks to develop,” David said, outlining a future:

“Portfolio of ArCoin and a portfolio of other investment products running on a blockchain that are SEC-registered and offer investors transparency and the ability to use peer-to-peer transactions to transfer the value of ArCoin.”

More investment products based on the blockchain may warm the SEC up to crypto at large. The commission has infamously hesitant to sign off on a Bitcoin ETF in the U.S., for example.

Publication date: 
07/06/2020 - 17:07
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