Arca Seeks SEC Approval to Launch Blockchain-Based Treasury Fund

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U.S.-based crypto asset manager Arca is seeking regulatory approval from the US Securities and Exchange Commission to offer a new stablecoin to retail investors, Finance Magnates reported April 16.

As detailed in a prospectus filed April 12, Arca aims to launch a blockchain-based bond fund whose shares would be tokenized on the Ethereum network. Should the Arca U.S. Treasury Fund be approved in the succeeding months, the fund will be subsequently rolled out to the general public but will not be traded across any stock exchanges nor other alternative trading platforms.

To maintain parity with traditional fiat currencies, Arca is framing the product as a stablecoin which would represent shares in the fund. Dubbed “Arca UST Coins,” the stablecoin would be an ERC-20 token that will run on the Ethereum network.

As outlined in the filing, the bond fund would require a minimum investment worth $1,000, with a target net asset value (NAV) of $1 per share. While 80 percent of the fund is intended to be invested in U.S. Treasury securities, the remaining fraction will be expended in debt issued by multiple private and public entities inside and outside the U.S.

As indicated in the prospectus:

“It is therefore anticipated that the underlying portfolio, and the NAV of Arca UST Coins, will have relatively little volatility. Accordingly, although holders of Arca UST Coins could experience greater NAV volatility compared to typical stablecoins, such volatility will be relatively limited.”

While the fund’s investment objective leans more towards stable value rather than huge revenue by seeking “maximum total return consistent with preservation of capital,” investors would still be entitled to quarterly dividends from the interest payments.

As a requirement for purchasing shares either from the fund or from another investor, traders “must first establish a wallet address through the Arca application and ensure that it is whitelisted with the Transfer Agent.”

According to the filing:

“Once an investor’s wallet address is whitelisted, the investor can use the Arca application to transfer money from a linked bank account to the Fund in return for shares of the Fund.”

While the company did not disclose how much of its dollar-pegged tokens would be distributed, Arca noted that Arca is targeting to raise around $25 million from the token sale for the viability of the fund’s operation.

Arca is a separate entity from NYSE Arca, one of the multiple companies that have also been working on gaining the SEC’s regulatory approval to launch a Bitcoin exchange-traded fund (ETF) in the U.S.