Digital asset management fund Arca has filed with the U.S. Securities and Exchange Commission (SEC) for creating a Bitcoin Trust. The product appears to be the firm’s first foray into Bitcoin service. The investment vehicle will now enable investors to get exposure to Bitcoin without directly buying the cryptocurrency.
Arca’s Latest Bitcoin Trust Challenges Grayscale
Arca joins among the field of asset managers with similar products from BlockFi, Osprey Fund, CrossTower, Bitwise, and others, who all rushed this year to launch their own Bitcoin fund. The funds are intended to attract those investors who want exposure to bitcoin without directly owning the cryptocurrency themselves.
The funds and trusts compete with Grayscale who is by far, the issuer of the largest bitcoin trust yet and has been trading since 2013 and is currently dominating the Bitcoin fund market.
The Arca Accredited Investor Bitcoin Trust also comes as a direct challenge to the notable Grayscale Bitcoin Trust, popular among the largest institutional buyers of Bitcoin. While Arca’s Bitcoin fund is open only to accredited investors who can invest a minimum of $25,000, Grayscale requires a minimum of $50,000 investment.
In January 2021, Arca raised $10 million in Series A funding, seven months later after the company set up the Arca U.S. Treasury Fund with the U.S. SEC in July 2020. The U.S. Treasury’s token called the ArCoins served as a proof of concept for Ethereum-based securities in the form of ERC-1404 tokens.
Bitcoin Trust Fund Allows Exposure to BTC Without Direct Holding
A Bitcoin trust fund issues shares that roughly track the price of Bitcoin. Investors can add the Bitcoin exposure without actually holding the cryptocurrency.
However, investors might have to pay more for the convenience of buying a regulated investment product in comparison to the actual price of the cryptocurrency. Despite this, buying the shares of the Bitcoin product still comes with the same type of volatility as the underlying cryptocurrency.