Arca Labs, the innovation arm of digital asset investment firm Arca, has partnered with blockchain tech firm Securitize to launch regulated, tokenized financial products.
According to a Thursday announcement, Securitize has signed on to provide a smart contract and issuance platform for the firm, starting with Arca’s tokenized fund dubbed the “Arca U.S. Treasury Fund,” which was launched in July 2020.
Arca touts the Arca U.S. Treasury Fund as the first treasury fund registered under the Investment Company Act of 1940 to issue shares as digital assets via the blockchain. The fund meets the same regulatory requirements as a mutual fund, but differs by offering exposure via Ethereum-based digital asset security tokens called “ArCoin.”
Arca states that the fund will typically “invest a minimum of 80% of assets in U.S. Treasury securities.”
Securitize has taken over the fund’s transfer agent role from TokenSoft, and will be tasked with managing regulatory compliance mandates, such as investor verification, know your customer and anti-money laundering policies, along with onboarding clients and issuing the fund’s shares via ArCoin. Securitize is a registered transfer agent with over 200 clients and nearly a half-billion dollars in regulated securities issued in the past three years
The transition has seen the fund’s existing outstanding balances burned and automatically reissued under Securitize’s new smart contract to each shareholder.
Additionally, there will be jointly-offered tokenized financial products that will be announced at a later date.
“Institutions have struggled to meet investor demand because few tokenization companies have met the rigorous regulatory and operational thresholds required by investors,” the announcement stated, adding 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.”