Arca Taps Securitize To List Tokenized U.S. Treasury Fund

The tokenization sector appears poised to continue ballooning in 2024.

On July 17, Arca, a digital investment manager, announced a partnership with Securitize, a company specializing in real-world asset (RWA) tokenization, to issue shares in the Arca U.S. Treasury Fund on-chain. The fund offers exposure to a portfolio of U.S. treasuries.

Securitize will serve as the trading venue for the fund’s digital shares. Arca highlighted that the partnership marks the first time a fund registered under the Investment Company Act of 1940 has issued shares as digital asset securities, describing the collaboration as a “significant milestone for registered tokenized funds.”

“As pioneers in the digital asset industry, Securitize and Arca have been at the forefront of integrating blockchain technology across all levels of the financial system,” the firms said in an announcement. “Both companies believe that the tokenization of RWAs has the potential to revolutionize the financial landscape by creating a more efficient, cost-effective, and transparent financial system.”

Arca said the launch also marks the first time that shares in a closed-end fund listed on a FINRA-registered Alternative Trading System (ATS) can be “transferred peer-to-peer, and purchased and redeemed through the Fund.” Closed-end funds are typically exclusively traded on secondary markets or purchased directly from a broker-dealer.

The SEC provided Arca with exemptive relief to list the Arca U.S. Treasury Fund’s tokenized shares (ArCoins) on secondary markets. The fund was first launched six years ago.

“We are thrilled to continue our work with Arca Labs after first launching The Arca U.S. Treasury Fund as part of our primary investment opportunities and now enabling liquidity options on the secondary market,” said Carlos Domingo, the co-founder and CEO of Securitize.

The news comes as the value held in on-chain treasuries funds is ballooning, with the sector’s market cap currently sitting at $1.86 billion after growing 140% since the start of the year, according to Rwa.xyz.

The sector’s growth was recently buoyed by the explosive rise of BlackRock’s Ethereum-based USD Institutional Digital Liquidity Fund (BUIDL), which investors can subscribe to through Securitize. In early July, BUIDL became the first on-chain treasuries fund to surpass a $500 million market cap, with the milestone coming less than four months after the fund’s debut in March.

BlackRock, the world’s largest asset manager, appears to have inspired other legacy financial giants to explore tokenization. On July 10, Goldman Sachs, a top 10 U.S. bank, plans to launch three projects related to tokenization before the end of 2024, including one in the United States.