Arca Labs, Arca’s digital asset investment innovation arm has teamed up with blockchain technology company Securitize to offer regulated, tokenized financial products.
It is the first treasury fund registered under the Investment Company Act of 1940 to issue shares as blockchain-based digital assets, according to Arca.
The fund complies with the same regulatory standards as a mutual fund, but it differs in that it provides exposure through “ArCoin,” an Ethereum-based digital asset security token.
The fund will normally “invest a minimum of 80 percent of assets in U.S. Treasury securities,” according to Arca.
Securitize has replaced TokenSoft as the fund’s transfer agent, and will be responsible for regulatory compliance demands such as investor verification, know your customer, and anti-money laundering regulations, as well as onboarding clients and issuing the fund’s shares via ArCoin.
Securitize is a registered transfer agent with more than 200 clients and almost $500 million in regulated securities issued in the last three years.
The fund’s current outstanding balances were burnt and automatically reissued to each shareholder under Securitize’s new smart contract throughout the transfer. In addition, tokenized financial products will be jointly offered and revealed at a later date.
The announcement stated that “institutions have struggled to meet investor demand because few tokenization companies have met the rigorous regulatory and operational thresholds required by investors,” and that the firms are “seeking to channel the growth of fast-developing blockchain technologies within the existing financial services regulatory framework, which we believe to be key for increased investor trust and adoption.”
