Avalon Labs considers filing first Bitcoin-backed debt public fund

Avalon Labs says it is exploring the possibility of filing the industry’s first Bitcoin-backed debt public fund aligned with SEC regulations.

After issuing the world’s first Bitcoin (BTC)-backed stablecoin USDa, Avalon Labs wants to expand their suite of financial products pegged to the BTC.

On Feb. 12, Avalon announced in a recent post that is currently evaluating the possibility of filing the industry’s first Bitcoin-backed public debt fund under the U.S. Securities and Exchange Commission Regulation A framework.

The SEC Regulation A framework is a securities exemption that enables companies to raise capital from credited and non-accredited investors through a public offering without having to adhere to a full SEC registration. As a result, Regulation A is often likened to a “mini-IPO” and is widely used by fund managers, real estate investment trusts, and private companies to enter the market.

By establishing the first Bitcoin-backed public debt fund, Avalon Labs hopes to bridge the gap between traditional finance and the crypto industry, paving the way for new opportunities to expand on Bitcoin-backed financial products.

Co-Founder of Avalon Labs, Venus Li, said in a statement that Avalon Labs has spent years researching how Regulation A is implemented in traditional finance and how it could be utilized within the crypto sphere.

“While successful precedents in the crypto industry are limited, our analysis of previous SEC-approved cases suggests a viable path forward,” said Li in a press release.

In 2021, Li had successfully secured approval for a public debt fund from the SEC.

If successfully implemented, a Bitcoin-backed public fund could become a milestone for the crypto industry, as it could attract more traditional investors into putting their funds in Bitcoin, while boosting mainstream adoption of Bitcoin-backed financial products.

Avalon Labs is an on-chain financial center for Bitcoin, offering users a variety of crypto-centered products including BTC-backed lending, a Bitcoin-backed stablecoin, yield-generating accounts, and a credit card.

According to data from DeFi Llama, Avalon’s Bitcoin-backed stablecoin, USDa, has a market cap of over $254 million.