crypto strategy

WisdomTree will launch its first blockchain-enabled fund

WisdomTree, the sponsor of exchange-traded funds and exchange-traded products, has implemented its first open-ended fund with stock records that can be tokenized on blockchains.

The WisdomTree Short-Term Treasury Digital Fund (WTSY) tracks the Solactive Treasury Index from one to three years. WTSY is the first open-ended fund with stock records that can be tokenized on Stellar or Ethereum blockchains according to WisdomTree. The fund operates on a blockchain but does not invest in any cryptocurrency.

Will Peck, Tree of Wisdom

Will Peck, head of digital assets at WisdomTree, told Markets Media that the company opted to provide passive exposure to U.S. Treasuries as rates rise and the asset class is one of the fundamentals of growth. ‘a wallet.

“We have requested additional funding,” Peck added. “We aim to be the leader in providing passive exposure to crypto building blocks.”

WisdomTree is well known for being a pioneer in the ETF industry and launched its first ETFs in June 2006. Peck said ETFs have amassed trillions in assets and will continue to grow due to their liquidity, transparency and their standardization, and will also continue to participate in mutual funds.

“We wondered what the impact on ETFs would be that ETFs had mutual funds,” he added. “The next frontier of innovation is blockchain and distributed ledger technology.”

Blockchains can provide near-instantaneous settlement finality on a peer-to-peer basis and enable trading 24 hours a day, seven days a week, every day of the year, regardless of holidays. They also enable atomic settlement, where software verifies that assets can be exchanged during settlement, and the use of smart contracts to make financial transactions more rule-based and predictable.

Peck went on to say that the fund took about two and a half years to reach this stage. It took a number of years of research and development with technology and service providers and discussions with the US Securities and Exchange.

The fund is an open and registered product under the 1940 Act and is regulated like a traditional mutual fund. Therefore, the fund cannot support anonymous transactions available in the crypto industry.

Unlike a traditional mutual fund, a transfer agent – Securrency Transfers, Inc. – maintains the primary record of the fund’s shareholding in its own books and records, but also maintains a secondary record of shares on Stellar Blockchains or ethereum. State Street is the fund’s custodian and administrator.

Peck said Securrency Transfers is a blockchain infrastructure provider and very few other companies can maintain records both on-chain and in their own books and records. He said: “We believe this secondary registration allows WTSY to achieve certain user experience and use case benefits that many appreciate about crypto, but it will not meet the definition that many have. crypto assets.”

Additionally, State Street is a long-time custodian and also has its own digital asset and tokenization business.

Source: tree of wisdom

An investor can buy or sell shares and keep the record of the transaction in the supported blockchain wallet of their choice. WisdomTree is channel independent and will choose the best channel for each use case.

Peck continued that WisdomTree chose the two blockchains for this fund based on the scale required by the asset manager. Moreover, Ethereum is the second largest blockchain behind Bitcoin and hosts many innovations.

“Stellar has low transaction fees, high throughput, and offers good settlement finality for this use case,” Peck said.

The fund has no management fees or other ongoing expenses charged to a shareholder, as the asset management industry is highly competitive, with some traditional mutual funds and ETFs already setting a zero management fees. However, WisdomTree affiliates expect to charge other fees, such as fees to facilitate transactions.

WisdomTree Premier

Investors will be able to purchase the fund on WisdomTree Prime, the company’s blockchain-based digital wallet, which is currently in beta and will roll out to more waitlist users later this year.

Peck said in a blog post that when CEO Jonathan Steinberg founded WisdomTree, he noted that unlike traditional mutual funds, all an investor needed was a brokerage account to access ETFs.

“Today, all an investor needs is a smartphone to access digital assets,” he added. “We believe this type of fund can bring mainstream assets, such as US Treasuries, into the evolving digital ecosystem, with the potential to unlock future use cases for these assets and distribution opportunities. .”

Source: tree of wisdom

In May of this year, WisdomTree Prime entered into a partnership with custody technology platform Fireblocks. WisdomTree said the integration of Fireblocks’ Multi-Party Computing (MPC) wallet technology should provide users with an additional layer of security associated with managing their private keys to transact in certain crypto assets like bitcoin or Bitcoin. ether and tokenized versions of active physics like gold

Peck said in a statement at the time, “As an early mover looking to bring passive investing strategies and other financial products and services to blockchain, partnering with technology providers is critical. that will help WisdomTree provide a secure experience for our users. .”

Jonathan Steinberg, Tree of Wisdom

Steinberg said on WisdomTree’s July 2022 earnings call that the deployment of digital assets remains on track.

“Our company’s responsible DeFi approach to digital assets, our brand of trust, and the opportunities arising from ‘Crypto Winter’ position us well for success in this space,” added Steinberg. “There’s a huge avenue of sustainable growth ahead of us, and I’m confident in WisdomTree’s ability to move forward.”

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