According to Blockworks, Anchorage Digital has partnered with Arca Labs to custody shares of a tokenized Treasury fund. This move is aimed at promoting institutional participation in the sector. The collaboration comes at a time when the tokenization of real-world assets is expected to be a 'defining trend' for institutional crypto in 2024, according to Anchorage CEO Nathan McCauley.
Arca, a crypto investment firm's innovation unit, first issued shares of its US Treasury Fund as digital asset securities, known as ArCoin, in 2021. Arca has posited that ArCoin can replace US Treasurys in enterprise workflows, thereby reducing costs and enhancing transparency. Anchorage, a crypto-focused bank chartered by the US Office of the Comptroller of the Currency (OCC), has been chosen to custody the shares. This partnership enables Anchorage clients to hold ArCoin at the bank. Institutions can now access the tokenized shares from the Anchorage platform, just like they would for the hundreds of other assets the company supports.
McCauley has stated that Anchorage fulfills the Securities and Exchange Commission’s definition of a 'qualified custodian.' This term was included in the regulator’s February 2023 proposal that would entrust the safekeeping of client assets to such entities. Arca Labs president Jerald David said in a statement, 'Now that institutions have validated the benefits of blockchain technology, companies are seeking the most secure and seamless digital assets solutions that meet US regulatory standards.'
The Anchorage platform uses hardware security modules, which keep assets offline in segregated, on-chain vaults while still making them accessible. McCauley argues that this model serves as a 'major unlock' for institutional participation in tokenization. Tokenizing assets, from real estate to funds, has been making news in recent years as major fintech companies and traditional finance players delve deeper into blockchain-related experiments.
The world’s largest asset manager, BlackRock, launched the USD Institutional Digital Liquidity Fund in March, marking the firm’s first tokenized offering. Franklin Templeton, another fund giant, which debuted its OnChain US Government Money Fund in 2021, began allowing institutional investors to transfer shares of the fund, represented by BENJI tokens, to other shareholders last week. 'Looking ahead, we will continue to expand our custody support for tokenization projects to advance institutional participation in the ecosystem for the long term,' McCauley said.