Arca to create ‘one-stop shop’ for investors after BlockTower merger

Arca and BlockTower are merging in an all-equity deal, the companies announced last week. 

Arca CEO Rayne Steinberg talked to Blockworks about the merger, timing and what this next cycle could look like. 

The two had been in talks to merge for a little over two months, Steinberg said. They’d always been close, but the merger just “made so much sense” after talks ramped up.

Aside from BlockTower’s venture team, which will be spun out, Arca and BlockTower plan to retain all their talent under one umbrella. Steinberg will lead the new company, with Jeff Dorman staying on as chief investment officer. Ari Paul, CIO and founder of BlockTower, will be moving to an advisory role, though Steinberg believes he’ll be “very involved.”

Steinberg pointed out that the two had to move quickly due to “crypto years,” which pass much faster than in other sectors. The deal is expected to close by the end of this year, and Steinberg said he couldn’t even imagine what crypto would look like if they waited another whole year to close. 

Read more: Latest crypto M&A deals signal ‘the tide is shifting’

The goal is for the new entity to become a “one-stop shop for sophisticated investors.”

And while the overall political environment wasn’t a huge factor, it’s definitely going to benefit the new company going forward. 

“We see this as a huge white space for the token market,” Steinberg told me. Previously, tokens had been “handicapped” because they haven’t been able to offer elements such as fee switches. If the regulation or enforcement actions around tokens loosen, then Steinberg is confident that he’s bringing the best team to the table. 

“It’s not just about saying that there shouldn’t be regulations or things like that, but sensible regulations that make sense,” he said.

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It’s not just tokens that are going to benefit from the new environment. Steinberg said he also remains bullish on activists investing in DAOs. 

The “inefficiencies in the space” have not allowed it to “mature, in having people that drive good governance thinking about outcomes for token holders,” he said. 

“I’m not knocking any regulatory regime or thinking about that. But just when you have an environment where you’ve kind of disallowed any productive use of tokens, from fee switches to utility or things like that…contrary to what you would probably want, you create an environment where only things like memecoins have any real traction, because they literally, by definition, cannot offer anything of a tangible value.”

Arca doesn’t have any plans for “specific lobbying,” Steinberg said. But the new company will continue to be a “steward” for the industry.

With more clarity, he believes, we’ll see both traditional and activist investors get more involved which, in turn, makes him more bullish. This could also lead to further consolidation down the line as crypto readjusts in the next cycle.

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