WisdomTree Launches Spot ETPs in Europe

WisdomTree has added three new physically backed cryptocurrency basket exchange-traded products to its lineup of offerings in Europe. 

The firm listed the WisdomTree Crypto Market (BLOC), WisdomTree Crypto Altcoins (WALT) and WisdomTree Crypto Mega Cap Equal Weight (MEGA) ETPs on Tuesday on SIX, the Swiss stock exchange, and Börse Xetra in Germany. They can be sold across the European Union. 

The ETPs allow investors to gain diversified exposure to crypto markets as well as participate in the potential growth of decentralized finance, payments, smart contracts and NFTs, said Jason Guthrie, WisdomTree’s head of digital assets in Europe.

The asset class has grown to about $2.6 trillion since its introduction a little over a decade ago, he added, and institutions have shown increased interest in crypto over the past year.

“Going from engagement on the topic to building the approach internally to actually executing on behalf of clients is a journey for institutions, and they understandably move slowly through that,” Guthrie told Blockworks. 

Looking beyond BTC and ETH

The institutional interest has gone beyond just bitcoin and ether, the executive added, noting that a diversified investment approach rather than concentrated bets within the space provides a “stepping stone” for certain asset managers.

“[There’s] the narrative around the growth smart contract platforms and the idea that it’s not going to be a winner-takes-all technology, that there is a multichain future that focuses on interoperability and the building of the use cases in DeFi, NFTs, the metaverse,” Guthrie explained. “All of that is starting to resonate, and the pace of which they’re picking that up is increasing, so we think there’s an appetite for these sorts of diversified basket products.”

BLOC offers exposure to a diversified basket of crypto assets, representing about 70% of the cryptocurrency market cap. Its underlying index includes bitcoin, ether, cardano, bitcoin cash, litecoin, polkadot and solana, and the offering rebalances on an annual basis. Each crypto asset has a maximum weighting of 45% and a minimum allocation of 2.5%.

WALT is designed for those who want more exposure to coins besides bitcoin and ether, and its index also comprises cardano, bitcoin cash, litecoin, polkadot and solana.

BLOC and WALT each carry a total expense ratio of 145 basis points. 

The Crypto Mega Cap Equal Weight offering, priced at 95 basis points, is the cheapest physically-backed cryptocurrency basket ETP in Europe, the firm noted. It currently allocates to bitcoin and ether, with a quarterly rebalance.

Family offices and private bank networks will likely be the first to allocate to the new WisdomTree products, Guthrie said, and the firm expects more asset managers to do so within the next year.

Sumit Roy, crypto editor and analyst at ETF.com, told Blockworks that these WisdomTree ETPs are well-designed funds and a good way for investors to get diversified exposure to crypto.

“WisdomTree Crypto Altcoins strikes me as pretty unique,” he noted. “We’ve seen ‘ex-bitcoin’ funds that invest in the top crypto tokens excluding bitcoin, but this one excludes ether as well, which is interesting.”

Latest launches part of larger effort

WisdomTree launched a physically backed bitcoin ETP in 2019 and brought an Ethereum product to the European market earlier this year.  

The firm has generated $4 million run rate revenue from crypto ETPs in Europe, executives said during the company’s earnings call a month ago.

WisdomTree CEO Jonathan Steinberg noted on the call that he believes a spot bitcoin ETF is a superior product to bitcoin futures ETFs, which the US Securities and Exchange Commission has recently permitted. The firm is one of many to have proposed a bitcoin ETF designed to invest in the crypto asset directly, though it, along with similar offerings from a range of issuers, awaits approval.

The SEC earlier this month rejected VanEck’s proposed spot bitcoin ETF, leaving many wondering when the agency could approve such a product.  

Steinberg told analysts on the October 29 call that he is “very confident” that physically backed bitcoin ETFs will ultimately launch in the US.

“I expect that it will play a big role in clients’ portfolios for those that are looking for bitcoin exposure,” Steinberg said, “and WisdomTree will play a big role within the physical market.”

Roy said he doesn’t believe these latest WisdomTree launches will put any pressure on the SEC.

“For eight years, they’ve faced tremendous pressure from the industry to approve a spot crypto ETF, but they haven’t budged,” he said of US regulators.

“I think the SEC has made it clear that it will act only when it is ready to do so. That could be months from now; it could be years. We really don’t know.”

The launches come after WisdomTree added bitcoin futures to its Enhanced Commodity Strategy Fund (GCC) and its Managed Futures Strategy Fund (WTMF), as well as expanded its digital assets team. 

Will Peck, WisdomTree’s head of digital assets, recently told Blockworks that the firm intends to bring more crypto products to investors in 2022 while also focusing on how blockchain can change the financial world more broadly.  

While Guthrie said there are no specific plans yet for additional crypto ETPs in Europe, he expects there to me more demand for single-asset, thematic and multi-asset offerings going forward.

“How can we include bitcoin inside a commodities basket? Is there a way to put a DeFi play next to an equities offering?” he said. “These types of multi-asset thematic approaches I think are going to be very interesting in the future, and so we are looking at all of that and will look to actively grow the range.”

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