Arca Files Plan for Ethereum-Recorded U.S. Treasury Fund Shares

Arca U.S. Treasury Fund filed a preliminary Form N-2 registration statement with the U.S. Securities and Exchange Commission on February 7, 2020, proposing to issue fund shares as ERC-1404-compatible tokens recorded on Ethereum. The filing described a continuous offering by a diversified closed-end interval fund, not a cryptocurrency sale and not an SEC approval.

That distinction made the filing consequential. Arca was attempting to place the shareholder record of a conventional regulated fund on a public blockchain while keeping the portfolio, investor checks and transfer controls inside established securities-law structures. On February 7, 2020, the proposal remained subject to completion; the fund had no operating history, and its shares were not available on a public exchange.

A Treasury portfolio with tokenized shares

The preliminary prospectus contemplated up to 100 million shares at net asset value, with an initial NAV of $1 per share. That ceiling was an offering limit, not money already raised. The minimum initial investment was $10,000, subsequent purchases required at least $1,000, and the fund could waive those minimums. No minimum proceeds were required before operations could begin.

Under normal conditions, at least 80% of assets would be invested in U.S. Treasury bills, notes and bonds. The balance could go into cash, cash equivalents or investment-grade fixed-income instruments; rated instruments had to carry at least an A rating from Moody’s or an equivalent rating from S&P or Fitch. The planned dollar-weighted average portfolio maturity was two to four years, with maximum average duration of eight years.

The filing was explicit that the fund would not invest directly or indirectly in digital assets. The blockchain component concerned how ownership of the fund’s securities would be authenticated and transferred, not what the portfolio would own. That separation was the institutional experiment: conventional assets and fund law underneath, blockchain-based shareholder records on top.

Ethereum did not remove the gatekeepers

ArCoins were designed as ERC-1404-compatible digital securities, a token format that allowed transfer restrictions to be enforced by smart contract. Only investors who completed anti-money-laundering and know-your-customer checks and were whitelisted by transfer agent DTAC could receive shares. A transfer to an ineligible address was supposed to fail.

The transfer agent would also retain an administrative private key with power to freeze, revoke or reassign tokens after errors, lost keys or impermissible transfers. That design limited the significance of Ethereum’s open settlement layer: peer-to-peer movement was contemplated, but legal ownership remained subject to the fund’s records and controls.

Liquidity was another constraint. ArCoins were not listed on a national securities exchange, alternative trading system or crypto exchange. Eligible shareholders could negotiate peer-to-peer transfers, potentially at prices different from daily NAV, but the filing warned that thin activity could produce limited liquidity and secondary-market volatility. As an interval fund, Arca proposed quarterly repurchase offers for 5% to 25% of outstanding shares at NAV, subject to regulatory conditions.

What February 7 established—and what it did not

The SEC’s EDGAR directory records the filing on February 7, 2020. Form N-2 is the registration form used by closed-end management investment companies to register under the Investment Company Act and offer shares under the Securities Act. The filing therefore put a detailed, reviewable architecture into the public record.

It did not establish that the SEC endorsed the product, that the offering was effective, or that investors could buy ArCoins on February 7. An SEC investor alert issued in 2019 had already cautioned that appearing in EDGAR does not mean the agency has validated or approved an offering. Arca’s statement that the product would be the first managed Treasury portfolio issued through a registered investment-company structure was a management claim in the prospectus, not an independent SEC finding.

Later context

On July 6, 2020, Arca announced that the fund had become available for investment and described it as the first Investment Company Act of 1940-registered fund to offer shares as digital securities. That later launch confirms the direction of the February filing, but it was not knowable as an accomplished outcome on February 7.