Arca Labs and Oasis Pro set up JV for tokenized ’40 Act fund trading

Arca Labs and Oasis Pro announced and funded a joint venture to develop tokenized products under the Investment Company Act of 1940 (‘40 Act), otherwise known as Blockchain Transferred Funds (BTFs). Arca Labs is the innovation division of digital asset management firm Arca, and Oasis Pro’s subsidiary, Oasis Pro Markets, operates a multi-asset Alternative Trading System.

As evidenced by a forthcoming study commissioned by Arca, broadening the number and scope of registered products currently offered within the digital asset securities ecosystem remains a critical goal to improving industry adoption. Arca launched the industry’s first BTF in July 2020, with the introduction of the Arca US Treasury Fund, which issues its shares as digital asset securities.

The creation and continued adoption of the Fund has validated this structure as an evolution of traditional financial instruments by incorporating blockchain technology. These proof points include the adoption and deployment of ArCoin, the digital asset securities representing shares of the Fund, into pilots and proofs of concepts.

With this new joint venture, Arca and OPI will work together by commissioning the OPI/Arca Digital Asset Working Group for Securities, comprised of market participants representing market makers, traders, hedge funds, and traditional financial institutions. Oasis Pro Markets provides a primary marketplace and, through OATSPRO, a secondary marketplace for trading digital asset securities, including a growing product suite that already includes equity, fixed income, asset-backed securities and now BTF’s.

OATSPRO, through their matching engine, enables flexibility for institutions and other subscribers to trade digital securities on its Alternative Trading System and make payment for those digital securities via digital cash (i.e., stablecoins such as USDC and DAI and, when available, central bank digital currencies (CBDCs) or fiat currencies through a custodian. The system provides for on-chain custody and settlement services for digital securities and digital cash, offering a streamlined process for transacting in private markets, with access to secondary market liquidity.

Jerald David, president of Arca Labs, said in a statement: “As we lead the charge to build the digital asset securities market, it’s crucial to be as inclusive and collaborative as we can be from the start. That’s why partnering with Oasis Pro Markets and jointly establishing a working group to understand the needs of the customers using these types of products is essential to better serve the market.”

The OPI/Arca Digital Asset Working Group for Securities (DAWGS), nominated by OPI, will initially consult with both firms on the terms and conditions necessary to create products that will meet the needs of the industry through the adoption of digital asset securities. The initial research and development survey of this group will take place over the coming months, making recommendations on portfolio construction and culminating with the goal of developing a regulatory filing to create a second BTF.

OPI CEO Pat LaVecchia said in a statement: “As the first US-regulated ATS to allow subscribers to settle trades of digital securities via payment through digital cash, we prioritized working with regulators to develop a solution that meets the needs of both regulators and our customers. We know that regulation is inevitable in digital assets and working with partners that share this same mindset is crucial to the development, validity, and success of the digital asset securities market and the ecosystem.”

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