My first thought was - but how do they limit who is able to receive the coin... And the answer is ERC-1404 as mentioned in the end of the article.
So why would they do it? Or why would investors prefer to use ERC-1404 instead of using ye olde centralized fund shares? It's more risky and the UX is well... we all know what it's like. Feels like the there has got to be more to their plan - cut out the middleman, decrease trading fees, own the trading...?
I imagine it would help with overhead?
I'm still reading through their prospectus, and it's not initially clear why one would do this instead of going through a traditional closed end fund.
It appears that ArcaLabs' answer to this may that they want to be the first ones in this space offering such a thing; certainly it might make it easier for retail investors to get in on the fun. But I don't know what sort of inefficiencies it addresses on the back-end in terms of fund management. They're gonna be putting the money raised from selling ArCoin into Treasury notes, and they're going to be handling all the regulatory requirements they would be subject to in the traditional markets (regular NAV calculations, account statements, regulatory filings, etc) with the added layer of having a crypto currency. Which, once you create the token, not really much to do there. But it doesn't seem to make the rest of it any easier.
I have zero knowledge of financial regulations; certainly the ERC-1404 standard was created and engineered for compliance, but I don't know enough about the regulatory landscape to understand if there's actually any value added over the traditional market vs simply allowing one to be compliant at all, which is what it appears to do. In such a case we'll see the real value adds come later, I guess?
A similar concept will be used in stablecoins issued by companies like Visa, imo.
Companies like that will either bring certain protocols into their controlled wallets + not let their coins leave, or allow their coins to freely move like USDC/etc., but have “safety” limitations built into the coin to prevent use of it in certain situations or dapps.
And this is when the true beauty of ETH-backed algorithmic stablecoins, or the competition amongst the various kinds of stablecoins, will become apparent.
>ERC-1404 is a more restrictive derivative of the popular ERC-20 interoperability protocol. The main difference is that ERC-1404 restricts where holders can send a token to a collection of whitelisted addresses. That’s a crucial point for regulators wary of letting tokens outside their scope.
This is why. It imho undermines the whole point of crypto, they basically control who can own it and whom said person can send it too. 95% of the world will be excluded from this deal.
Correct, this is the definition of SEC approval as mentioned.
A non SEC approved fund is much easier to manage, but requires a jurisdiction with sufficient grey areas and likely needs to exclude US citizens.
Ethereum is agnostic to its uses. It's an open platform. If people want to create whitelisted addresses, then they're free to do so. If Cardano is decentralized and open, then it'll be possible there as well. That's what a general purpose programmable blockchain is meant for.
It'll be interesting to see the process to become whitelisted. IMO, there needs to be a reasonable balance between crypto and regulatory priorities. At the end of the day, a US treasury fund trading on the Ethereum blockchain is definitely a step in the right direction.
How do you kyc a ETH address? You can kyc a person, but there is no government friendly way to prove that you control a address. Hell you could just transfer ownership by selling or leaking someone your private key.
That’s not a beginning, that’s the SEC having drawn a line in the sand and gotten their way 100%.
Why would they ever allow a ERC-20 token after this? What leverage do we or anyone wanting that have? None of the people in Congress would allow or endorse that, they are way to worried about some people in the Middle East slipping their sanctions and strong arming.
What you see here is nothing less than the defense of US soft power. They give that up when they give up the dollar being the worlds reserve currency and their status as superpower.
The launch marks the first time the crypto-skeptical SEC has allowed a fund represented by cryptographics tokens to enter the investment markets under the Investment Company Act of 1940. Arca has been pushing for various forms of the ArCoin proposal for nearly 20 months, as shown in regulatory filings.