Ben Strack

<div id="highlights-block_628be970c94f4" class="highlights">
 <ul>
 <li>WisdomTree envisions its mobile app to be an alternative to JPMorgan or Charles Schwab accounts</li>
 <li>Asset manager aims to continue building diversified crypto products for institutional investors in Europe</li>
 </ul>
 
</div>



As WisdomTree gets set to launch <a href="https://www.googleadservices.com/pagead/aclk?sa=L&amp;ai=CMBXKkvGLYqT2K_nsj-8Pn4G3wA_kx5SYaovcqYa5D5X1kZTBLggAEAEguVRgyYb_h_Cj7BKgAenQ27AoyAEByAPYIKoEXk_QuQJDELS0mk9ko4jrzpCaVL0F1O0igdYsup_M-h7jlbUugCOsUTBkKJUtlDXgxusXwO-8VJNlDm_DUiKLZFttWJgvtpvInttmmYVFJwWA12WN9sjQL-Fmhx8cCJ7ABMeSrrzpA4AFkE6IBcWl_9g7oAZmgAfpiKyQA4gHAZAHAagHpr4bqAe5mrECqAfz0RuoB-7SG6gH_5yxAqgHytwbqAfYprECoAiv0qYEsAgB0ggMEAIghAEyAoJAOgEAmgkfaHR0cHM6Ly93d3cud2lzZG9tdHJlZXByaW1lLmNvbbEJoC5PRNQ1pIO5CaAuT0TUNaSD-AkBmAsBqgwCCAG4DAHoDAaCFBQIAhIQd2lzZG9tdHJlZSBwcmltZYgUAsgU6YK8qdzzvLpy0BUB-BYBgBcBkhcJEgcIARADGPIB&amp;ae=2&amp;ved=2ahUKEwjy_ez2vfb3AhWPlnIEHXG9ApoQ0Qx6BAgCEAE&amp;dct=1&amp;cid=CAASFORoEgcD0OzC5In3NNWXW-LyT3iO&amp;dblrd=1&amp;sival=AF15MECIGMVfVt9uzWR4E_Fuq5K19FziuP0jUNOncwmPaU6zthq4VJLKhqfN0RTa0ZUx--t8UpgwcdveNWoeUFaaXGBwUr1xYo6Yo2Yuve626kxUNNiG-v_06Dt7WpT-_7YXzRcr5BqN_k3l6KHoaBTQZFO04yCzYEzup74QW4yKqfWr0vH3uTwyXWRe8R8YMcbdc9LZ3BP2&amp;sig=AOD64_01UFM1BNlk__iP9WGTxSQNQiRVlg&amp;adurl=https://www.wisdomtreeprime.com%3Futm_source%3DGoogle%26utm_medium%3DPaid%26utm_campaign%3DBrandSearch%26utm_content%3D2" target="_blank" rel="noreferrer noopener">a mobile app</a> allowing users to hold tokenized assets, the company’s product head for digital assets said such an offering could serve as a catalyst for the finance sector to have its “internet moment.”



Jason Guthrie, who worked at Macquarie Group and Deutsche Bank before joining WisdomTree in 2017, told Blockworks during the <a href="https://cms.blockworks.co/events/permissionless-livestream/" target="_blank" rel="noreferrer noopener">Permissionless event</a> in Palm Beach last week that financial services companies have not yet dramatically changed their business models amid digitalization in the space.



“I don’t think financial services had its internet moment,” he said. “It’s not like it’s Facebook disturbing advertising or Netflix disturbing television. These were huge disruptive, revelatory uses of that technology, and finance hasn’t got it.”



Called WisdomTree Prime, the company’s upcoming offering — <a href="https://cms.blockworks.co/wisdomtree-launching-crypto-app/" target="_blank" rel="noreferrer noopener">first announced in January</a> — seeks to provide a traditional finance experience built on decentralized finance principles. The asset manager is looking to move the app into beta testing at the end of this quarter and roll it out nationally later this year.&nbsp;



The app will initially allow users to transfer tokenized assets such as dollars, gold, Treasurys, bitcoin and ether, Guthrie revealed. It then seeks to bring fixed income and equities by the second quarter of next year.&nbsp;



Transferring value through these assets would be nearly instant. The app would also offer customer support, such as private key recovery.



“We want to add these experiences that make [digital assets] usable in the real world,” he said.



The estimated 200 million people involved in crypto today will continue to drive innovation in the space, Guthrie added, but usability has been a barrier to entry for the larger market.



“I care about the two billion people that are going to come on next,” he said. “How can we get them to pick a service like WisdomTree Prime instead of their JPMorgan or Schwab brokerage account?”



<h3 class="wp-block-heading">Diversification will be key</h3>



WisdomTree is also seeking to continue building diversified crypto products for institutional investors in Europe. The company launched <a href="https://cms.blockworks.co/wisdomtree-unveils-3-new-crypto-etps-as-investors-seek-diversity/" target="_blank" rel="noreferrer noopener">Solana, Cardano and Polkadot ETPs</a> on various European exchanges in March.



Institutional adoption, while slow, has “a huge amount of potential,” Guthrie said, as many family offices, hedge funds, asset managers, private banks, pensions and endowments engage with the company about the space.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



“The biggest problem for institutional adoption is that those institutions need to be able to adequately explain what they’re putting the client money into,” Guthrie explained. “So you’re educating them on how to educate clients.”



Guthrie noted the parallels between crypto adoption and the adoption of ETFs about 15 years ago. The ETF wrapper was something institutions had to learn about and come to grips with as clients were already comfortable with mutual funds.&nbsp;



“It’s the same thing here,” he said. “We’ve got this brand new way of doing things — this time it’s an asset class — but you can see they’re trying to get their internal processes comfortable with how they will communicate it with clients.”



In terms of new products, WisdomTree is focused on three segments: DeFi, the metaverse and layer-1s that compete with Ethereum. It is also actively working on how to fuse innovations within the space into the products, such as passing along staking yields to investors.&nbsp;



“We all know diversification is the only free lunch in investing,” Guthrie said. “Those that can bring a thoughtful and risk-managed approach to that are going to be the ultimate winners, and that’s what we’re trying to do.”



As for non-diversified products, WisdomTree is also one of many asset managers that has filed for a spot bitcoin ETF. The company <a href="https://cms.blockworks.co/wisdomtree-amends-bitcoin-etf-application/" target="_blank" rel="noreferrer noopener">amended its application</a> for the fund in December — a week after the SEC rejected its proposal — and expects a decision in the coming months.&nbsp;



Guthrie said he does not expect the agency to approve a spot bitcoin ETF this year.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Jason Guthrie

WisdomTree Seeks To Spur Finance’s ‘Internet Moment’

<div id="highlights-block_61a4d39fa54f2" class="highlights">
 <ul>
 <li>Three new products begin trading today: WisdomTree Crypto Market (BLOC), WisdomTree Crypto Altcoins (WALT) and WisdomTree Crypto Mega Cap Equal Weight (MEGA) ETPs</li>
 <li>Appetite for diversified basket products increases as institutional investors look beyond just bitcoin and Ethereum, according to WisdomTree’s head of digital assets in Europe</li>
 </ul>
 
</div>



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.&nbsp;



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.&nbsp;



<h3 class="wp-block-heading">Looking beyond BTC and ETH</h3>



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&#8217;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.&nbsp;



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&#8217;ve seen ‘ex-bitcoin’ funds that invest in the top crypto tokens excluding bitcoin, but this one excludes ether as well, which is interesting.”



<h3 class="wp-block-heading">Latest launches part of larger effort</h3>



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



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 <a href="https://cms.blockworks.co/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading/" target="_blank" rel="noreferrer noopener">bitcoin futures ETFs</a>, 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 <a href="https://cms.blockworks.co/sec-rejects-vanecks-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">rejected VanEck’s proposed spot bitcoin ETF</a>, leaving many wondering <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">when the agency could approve such a product</a>.&nbsp;&nbsp;



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&#8217; 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&#8217;ve faced tremendous pressure from the industry to approve a spot crypto ETF, but they haven&#8217;t budged,” he said of US regulators.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“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&#8217;t know.”</blockquote>



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.&nbsp;



Will Peck, WisdomTree’s head of digital assets, <a href="https://cms.blockworks.co/wisdomtree-plans-to-launch-more-crypto-offerings-in-2022/" target="_blank" rel="noreferrer noopener">recently told Blockworks</a> 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.&nbsp;&nbsp;



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.”



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your inbox every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
<hr class="wp-block-separator">

Jason Guthrie

Newsletter

Blockworks Research