A new type of SEC-regulated crypto fund just launched

A Los Angeles crypto investment fund today announced that its SEC-registered fund is open for business.

The Arca US Treasury Fund is the first SEC registered product to offer shares in the form of digital securities under the Investment Company Act of 1940. The shares take the form of the fund’s Ethereum-based token, ArCoin. 

"It is truly exciting to be pioneering new digital investment products,” said Rayne Steinberg, chief executive officer of Arca.

The token takes the form of an ERC-1404, an Ethereum token specifically designed to be compliant with regulators. Unlike the common ERC-20 standard,  ERC-1404s can be frozen, and transactions rejected, or approved only for certain addresses.

Arca’s SEC approval ought to give its investors some peace of mind. The fund provides shareholders with daily updates, protections against bankruptcy, and audited financial statements. All assets are held in a trust, guarded by an “independent board of trustees.”

It welcomes anyone with $1,000 or more.

Arca will invest 80% of the digital cash into “interest-bearing, short-duration, U.S. Treasury securities.” Each ArCoin represents a single share in the fund, which pays interest each quarter. 

From investors, Arca requests 3.22% in fees; as a special welcome offer, it’s cut them to 0.75% for the first year. 

Jerald David, the president of Arca Capital Management, the company that oversees Arca Lab, said that interest in crypto funds has peaked amid the coronavirus pandemic, a boost to the “shift in our world from physical to digital during the last several years.”

SEC-registered crypto investment products are nothing new. Grayscale, for instance, runs one of the largest Bitcoin investment funds around. It regularly checks in with the SEC. The difference is that Arca’s investing its own cryptocurrency, rather than Bitcoin.

Hopeful hodlers could take the news to mean that the SEC might soon get a move on with the long-awaited Bitcoin exchange-traded-fund.