One word that goes hand in hand with cryptocurrency is innovation, with adept participants certain to tell you that we've seen a handful of them in the last decade.
Well, Los Angeles based crypto asset manager, Arca is leading the latest innovation having filed a prospectus with the U.S SEC to create a new type of stablecoin that would allow holders invest in the U.S Treasury securities.
Dubbed Arca Treasury Fund, the startup plans to start a bond fund whose value will be represented by tokenized securities issued on the Ethereum blockchain.
The tokens will be called Arca UST Coins and will strive to maintain the same value with the U.S dollar even though the startup notes that it could be less stable than other stablecoins.
Potential investors would have to purchase a minimum of $1000 worth of Arca UST Coins while the fund's target net asset value (NAV) will be $1 per share according to the prospectus.
Although Arca didn't mention how many units of Arca UST coins the fund would put on sale, it said that it would need at least $25 million to operate the fund successfully. The prospectus noted that 80% of the fund's value would be invested in the U.S Treasury securities while the rest would go into debt issued by both U.S and non-U.S based firms.
Those who invest in the fund would receive quarterly dividends on interest generated by the portfolio with Arca suggesting that the value of the returns may fall within a known range.
The “investment objective is to seek maximum total return consistent with preservation of capital,” the prospectus confirms before adding that the tokens would not be tradable on a stock exchange or any other third-party platform other than Arca's.
It is worth noting that Arca should not be confused with NYSE Arca, the stock exchange Stmarket.co reported is seeking regulatory approval for a Bitcoin ETF alongside Bitwise Asset Management.