SEC received an application for an Ethereum-based stablecoin

  • Arca seeks regulatory approval to launch tokenized bond fund.
  • The new type of stablecoin will be available to retail investors.

The US-based digital assets management company Arca filed an application with the Securities and Exchange Commission to launch a bond fund with shares issued on Ethereum blockchain and backed by the US Treasuries, Coindesk reports.

The shares of Arca U.S. Treasury Fund (Arca UST Coins) are  on fact ERC-20 tokens that are supposed to serve as a stablecoin pegged to the US Dollar. 

The Arca U.S. Treasury Fund would not be available on any stock exchange or alternative trading system. Thus, to purchase the shares, traders would need to get a wallet address in a dedicated Arca’s app and make sure that it is approved and whitelisted by a Transfer Agent, according to the filing.

The minimum investment amount is set at $1000, while a target net asset value (NAV) is $1. The Fund aims to invest 80% of the capital in  U.S. Treasury securities, the rest 20% would be distributed in debt issued by entities both inside and outside the U.S.

“It is therefore anticipated that the underlying portfolio, and the NAV of Arca UST Coins, will have relatively little volatility. Accordingly, although holders of Arca UST Coins could experience greater NAV volatility compared to typical stablecoins, such volatility will be relatively limited,” – according to the document.

The Fund will be focused on preservation of capital as its main objective is “to seek maximum total return consistent with preservation of capital.” Investors would receive dividends from interest payments.

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