February 10, 2021
Jerald David and Blair Bingham
Thought Leadership

The Modern Treasurer Part 1: Treasury Management’s Biggest Pain Points Meet Blockchain

“We believe that the shift to real-time treasury — where payments, liquidity management, and security management are effectively instantaneous — will gather pace with the emergence of an always-on economy.” - Citibank, Top Priorities for 2020 Report

ArCoin: “The First of its Kind”

As the first registered Fund to issue digital securities on the blockchain, the Arca US Treasury Fund and its digital share, ArCoin, are uniquely situated to help bridge the gap between traditional finance and blockchain. The Arca US Treasury Fund invests at least 80% of its portfolio of assets in short duration treasuries and equivalents, thus making ArCoin, in our opinion, well suited as a proxy for US Treasury bills, bonds and notes in a corporate treasurer’s portfolio. By replacing US Treasuries with ArCoin, treasury managers have the opportunity to maintain their exposure to US Treasuries, while receiving the efficiencies of blockchain. *

* Please note that ArCoin represents a digital share of the Arca U.S. Treasury Fund, which invests at least 80% of its assets in U.S. Treasury securities. A shareholder’s liquidity with respect to its ArCoin shares will be primarily dependent on availability and willingness of counterparties to engage in peer-to-peer transactions. 

So What Are These Efficiencies Again?

For any industry, blockchain enables the following features:

  1. Increased Speed - Blockchain executes on-chain transactions within minutes.
  2. Reduced Costs - By allowing for parties to directly transact, middlemen are removed, thus cutting costs.**
  3. Enhanced Transparency - Even on a private blockchain, every transaction is recorded. This enables transparency in auditing and accounting, thus reducing costs and raising efficiency.
  4. Strengthened Security - Blockchain, unlike current technologies and their platforms, operates on a thick stack protocol. This thick stack means blockchain’s security is not an “added layer” but inherent.

** “Gas” is an additive fee that ArCoin shareholders will incur when they transfer their shares in a peer-to-peer transaction. Readers should keep this in mind when considering the “lower costs” of transacting on the blockchain. 

How Can Treasurers Potentially Benefit from Blockchain?

Corporate treasury, like any other corporate function, is continuously evolving. The diagram below highlights the five common concerns of treasurers as they move into a more digitally connected world. We believe that many of these pain points can be addressed through wide scale adoption of blockchain solutions. 

Blockchain Can Revolutionize Treasury Management… so, what about ArCoin?

As treasurers assess integrating blockchain into their workflows, ArCoin is designed to provide a lower volatility solution for companies compared to more volatile digital assets like Bitcoin. Additionally, US Treasuries, which make up at least 80% of the Fund’s assets,  have traditionally played a large role in enabling lower risk and higher liquidity with respect to treasury management. A new digital age is upon us, and the modern treasurer must orient themself towards the future by learning more about digital solutions that can help modernize its functions. Implementing and advocating for digital solutions today can prepare your treasury for the change in tools and processes enabled by blockchain solutions.

This is the first post in a series, The Modern Treasurer. Look for The Modern Treasurer: Part 2, where our team builds upon blockchain’s efficiencies for treasury management and pulls back the curtain on the recent BTC as digital gold hype.  

As always, our team is awaiting your input and questions at support@arcalabs.com 

Sources: The Global Treasurer, Bloomberg

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