Today WisdomTree launched WisdomTree Prime, a mobile app for digital assets. The asset manager is best known for its conventional Exchange Traded Funds (ETF) and has $94 billion in assets under management. The new app is available in 21 U.S. states and lets investors buy Bitcoin, Ether, tokenized gold and WisdomTree digital funds.
These digital funds don’t invest in cryptocurrency but instead are conventional funds tokenized on the Stellar and Ethereum blockchains.
However, the digital funds are only accessible via the WisdomTree Prime app and can’t be traded on a centralized or DeFi exchange. Late last year, the SEC acknowledged the registration of the funds enabling WisdomTree to prepare for launch. But there’s a feature that will have helped to get the green light. Blockchain is not the only record of ownership. Additionally, it uses an SEC registered transfer agent to keep track of the holders of the funds’ shares.
“We are on the precipice of a major shift in financial services, where blockchain-enabled finance will transform the industry as we see it today,” said Jonathan Steinberg, WisdomTree Founder and CEO.
The digital funds include five different Treasury funds, and two linked to the S&P 500 stock index.
WisdomTree worked with Securrency for the fund tokenization.
Pay for your coffee with gold
We expected the gold offering to involve a third party such as Paxos that already tokenizes gold. But the digital Gold Token is issued by WisdomTree Digital Holdings and backed by gold bullion held in custody at HSBC vaults in London.
“Bringing traditional assets into the digital ecosystem will allow for blockchain technology to be used in a more mainstream capacity, positioning the app to be at the center of an investor’s financial life over time,” said Will Peck, Head of Digital Assets at WisdomTree.
WisdomTree plans to release a payment card allowing investors to make payments using the gold tokens and other digital assets.
Incumbent asset managers v crypto startups
Incumbent asset managers are increasingly embracing blockchain. However, their issuances are sometimes conflated with those of crypto startups, and they are frequently not the same.
For example, the tokenized Treasury investments issued by startup Ondo ($133m market cap) are often considered equivalent to Franklin Templeton’s tokenized money market fund ($300m market cap) despite major differences.
For Ondo you can pay with a stablecoin – a key advantage in a world of scarce crypto on and off ramps. However, investors have to go through a KYC process. The token is backed by ETFs from BlackRock’s iShares but attestations are a printout from the accounting system, meaning there is some risk.
In contrast, both Franklin Templeton and WisdomTree are the asset managers of the underlying funds.
To invest in the Franklin Templeton fund you have to pay in the conventional way and you can only invest via the Benji app. We believe WisdomTree Prime is similar to Benji in this respect. That might make it less appealing to “crypto bros”. However, in both cases there’s the comfort of a well established regulated brand that will appeal to mainstream investors.
Contrary to popular perception, a recent Broadridge survey found a significant proportion of crypto investors are mainstream, including their choice of metrics to analyze investments. That might explain why Franklin Templeton and WisdomTree can compete comfortably with crypto startups.
