Arca Labs and Securitize partner on tokenized financial products
By Edlyn Cardoza
Arca Labs, the innovation division of digital asset management firm Arca, and Securitize, which enables investors to access the private markets, including private businesses, real estate, and funds recently announced a partnership to bring more regulated, tokenized financial products to investors, beginning with the Arca U.S. Treasury Fund.
The news is noteworthy because investors are increasingly seeking exposure to new blockchain based financial products, including digital asset securities, but institutions have struggled to meet investor demand because few tokenization companies have met the rigorous regulatory and operational thresholds required by investors. Arca and Securitize 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.
Under the agreement, Securitize will provide the smart contract and issuance platform behind the Arca U.S. Treasury Fund, the first registered ‘40 Act fund to issue its shares through the blockchain. As the Fund’s transfer agent, Securitize will perform investor verification, KYC/AML and onboarding, issue shares of the Fund through the form of ArCoin digital asset security tokens, and maintain off-chain records of token ownership and history. Additional, jointly offered tokenized financial products are expected to follow.
“At Arca, we see a future where the vast majority of securities transactions are energized by blockchain technology,” said Rayne Steinberg, CEO of Arca. “To make this a reality, products and companies have to deliver at the highest levels of competency, transparency and trust. Securitize aligns with Arca on these core principles and our efforts will be vital in driving us toward a future where digital securities are the norm, not the exception.”
“This partnership is important because ‘40 Act funds are the backbone of the regulated financial markets, representing roughly half the value of all funds worldwide. Expanding our services to cover U.S. regulated funds with a strong partner like Arca is a continuation of our leadership in developing digital financial products offered under existing law,” said Securitize CEO Carlos Domingo. “Arca is a terrific asset manager and brand. This partnership demonstrates that the evolution of finance from a paper-based, centralized, less accessible past to a digital, decentralized, more democratized future can provide investors with new and better opportunities within the existing regulatory framework, perhaps with some modernization over time.”
“Ensuring a seamless transition for investors in the Arca U.S. Treasury Fund was our top-priority, and we quickly found a strong match in Securitize,” said Jerald David, president of Arca Labs. “Securitize is a registered transfer agent with over 200 clients and nearly a half-billion dollars in regulated securities issued in just three years, demonstrating a strong alignment between our companies in scale, operational excellence and uncompromised service to our investors.”
“Partnering with a turnkey solution such as Securitize is key for Arca Labs’ plans for continued growth. With each investor receiving a Securitize iD, they will have access to a broad range of investment opportunities from one platform and, importantly, existing Securitize iD holders will be able to invest in our offerings, as well,” added David. “Arca Labs is excited to continue our focus as an educator and product leader in offering regulated financial instruments on the blockchain.”
Current investors in the Arca U.S. Treasury Fund have received instructions on how their shares will be transferred to Securitize.
IBSi Prime News
October 21, 2021
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