Anchorage, Arca Labs link up in bid to advance tokenization adoption

The tokenization of real-world assets is set to continue as a “defining trend” for institutional crypto in 2024, Anchorage Digital CEO says


Anchorage Digital and Adobe Stock modified by Blockworks


Anchorage Digital is now custodying shares of a tokenized Treasury fund via a partnership with Arca Labs meant to advance institutional participation in the segment. 

The link-up comes as the tokenization of real-world assets is set to continue as a “defining trend” for institutional crypto in 2024, Anchorage CEO Nathan McCauley told Blockworks.

The innovation unit of crypto investment firm Arca first issued shares of its US Treasury Fund as digital asset securities, known as ArCoin, in 2021. The company has argued that ArCoin can replace US Treasurys in enterprise workflows while reducing costs and improving transparency.

The company has now turned to Anchorage — a crypto-focused bank chartered by the US Office of the Comptroller of the Currency (OCC) — to custody the shares.

Anchorage Digital Co-Founders Nathan McCauley and Diogo Mónica

The alliance allows Anchorage clients to keep ArCoin in custody at the bank. Institutions can now access the tokenized shares from the Anchorage platform as it would for the hundreds of assets the company supports. 

Read more: Crypto-focused federal chartered bank intros settlement network

McCauley has said Anchorage meets the Securities and Exchange Commission’s definition of a “qualified custodian.” The term was included in the regulator’s February 2023 proposal that would “entrust safekeeping of client assets” to such entities.

“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,” Arca Labs president Jerald David said in a statement.

The Anchorage platform uses hardware security modules, which keeps assets offline in segregated, on-chain vaults while keeping them accessible. The model serves as a “major unlock” for institutional participation in tokenization, McCauley argued.

Tokenizing assets — from real estate to funds — has made headlines in recent years as some of the biggest fintech companies and traditional finance players delve deeper into blockchain-related experiments.

Read more: Citi the latest TradFi player to test out asset tokenization

The world’s largest asset manager, BlackRock, launched the USD Institutional Digital Liquidity Fund in March, marking the firm’s first tokenized offering. 

Fellow fund behemoth Franklin Templeton, which debuted its OnChain US Government Money Fund in 2021, started allowing institutional investors to transfer shares of the fund — represented by BENJI tokens — to other shareholders last week.

Roger Bayston, Franklin Templeton’s head of digital assets, previously told Blockworks that BENJI essentially acts as a stablecoin while also generating income. 

“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.

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