Digital Assets: Arca Launches A Treasury Fund that Will Issue Its Shares as Digital ArCoins
The Arca U.S. Treasury Fund is SEC-registered.
The Arca U.S. Treasury Fund is the first-ever financial product regulated under the Investment Company Act of 1940 allowed to offer digital securities. Digital asset investment firm Arca launched the closed-end fund on July 6. (Hedgeweek)
Though the fund will invest 80% of its portfolio assets in U.S. Treasury securities, shareholders investing in the fund will be issued digital securities called “ArCoin.”
ArCoin, the digital securities, will entitle the holders to the quarterly interest accrued on the fund’s portfolio assets of interest-bearing, short-duration U.S. Treasury securities.
Moreover, investors do not need a broker to purchase the ArCoins, which are tradeable peer-to-peer using the Ethereum blockchain.
Arca Labs, the research unit of Arca created the ArCoin. However, the ArCoin is an ERC-1404 token built on the Ethereum blockchain and, therefore, features inbuilt restrictions on its transferability.
Arca U.S. Treasury Fund – a hybrid digital asset class?
“The fund is significant because it is the first registered fund to issue digital securities through the use of blockchain technology, said Susan Gault-Brown, a partner at Morrison & Foerster, the law firm which advised Arca, to CoinDesk. “As a result, the fund and the digital securities it issues are subject to a comprehensive regulatory framework while introducing an innovative and versatile asset to the digital ecosystem.”
Rayne Steinberg, chief executive officer of Arca, described the fund as a “transformative” step in the unification of traditional finance with digital assets investing.
Further, he added that the fund was a new category of a regulated and digital investment product.
Useful features of the new fund
According to Forbes, which quoted Jerald David, president of Arca Capital Management, the fund also had the following benefits:
- freezing and replacement of tokens for investors who have lost their public keys
- transferability of ArCoin to only whitelisted ETH addresses
- smart contracts on the blockchain that will restrict transferability as above
- interestingly, no need for a broker
- moreover, there was the ability to track transactions on the ethereum blockchain on a real-time basis
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