Digital asset investment firm Arca today gained approval from the U.S. Securities and Exchange Commission for a new investment product that combines Treasury securities with blockchain management.

Called the Arca U.S. Treasury Fund, the fund invests 80% of its portfolio assets in interest-bearing, short-duration U.S. Treasury securities, with investors being paid quarterly interest. That’s where similarities to traditional investment funds end, since shares in the fund are offered as digital securities.

Those who invest in the fund acquire ArCoin, a blockchain-based share that can be traded in a similar way to a cryptocurrency with the securities built on the Ethereum blockchain and fully ERC-1404 compliant. That said, ArCoin won’t be traded on cryptocurrency exchanges, instead among financial institutions.

ArCoin is traded on Tokensoft Inc.’s blockchain service. It’s designed to allow financial institutions to trade blockchain-based equities and similar products, with support for clearing, settlement, lending, payments and trading.

The company says ArCoin has multiple use cases. Individuals could use ArCoin as an alternative to volatility in other digital assets while financial institutions and digital asset enterprises could use ArCoin for clearing and settlement, lending, treasury management and payments.

Getting to this point has been a long road for Arca, since it submitted nine applications over two years before finally gaining approval from the SEC. The fund is registered under the Investment Company Act of 1940, which mandates that investment companies and fund register with the SEC as well as provide adequate disclosures to investors. The biggest advantage of the registration for investors is that the act provides bankruptcy protection so in case something goes wrong with the fund, investors can have their investment returned.

“Our announcement today is a groundbreaking and transformative step toward the unification of traditional finance with digital asset investing as this new category of regulated, digital investment products is made available to investors,” Rayne Steinberg, chief executive officer of Arca, said in a statement.

Indeed, the approval from the SEC for Arca has potentially opened the door to new and innovative blockchain-based financial products. Obtaining approval may be a challenge for many companies given the hurdles the SEC puts in place, but Arca has now showed how to do it.

Image: Arca