Arca is looking for regulatory approval to release a new type of stablecoin to retail investors.
Arca, a Los Angeles based digital asset manager, has filed a prospectus with the SEC for a bond fund with the shares being tokenized on the Ethereum blockchain. If approved, the Arca US Treasury Fund wouldn’t be traded on stock exchanges but would still be available to retail investors through their Arca application.
The shares in the fund would be ERC-20 tokens and will be referred to as “Arca UST Coins.” The minimum investment for the fund would be $1,000 and will have a minimum of 80% invested in US Treasury securities with the rest invested into various public and private entities both in and out of the US. Since this will not be backed 100% by US Treasury Securities, it will be less stable than other stablecoins, like USDC.
“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.” -The prospectus filed
In addition, investors will receive quarterly dividends from the interest payments on the US Treasury securities. This fund is designed to protect investors money rather than receive “huge profits.”
Since the fund will not be traded on any stock exchange, Arca has created their Arca application which will allow investors to transfer money to and from their bank account in return for shares of the fund.
“ [Users] must first establish a wallet address through the Arca application and ensure that it is whitelisted with the Transfer Agent. 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.” -The prospectus filed
Disclosure: This isn’t the same company as NYSE Arca who is looking to launch a Bitcoin ETF in the US.