WisdomTree Takes TradFi to Blockchain, Gets Regulatory Green Light
WisdomTree’s fund that bridges the worlds of traditional finance and the digital economy has received the go-ahead from regulators and went into effect on September 26, Will Peck, head of digital assets at WisdomTree, explained in a recent blog post about the fund. However, there is a catch to investing right now.
The WisdomTree Short-Term Treasury Digital Fund (WTSY) seeks to track the Solactive 1-3 Year Treasury Bond Index, providing investors with the opportunity to preserve capital while generating income by focusing on shorter-duration bonds that are generally less interest rate sensitive than their longer-duration counterparts.
The twist is that it is a digital fund with multi-chain functionality. A primary record for WTSY is held on the usual physical books-and-records, while a secondary record of share ownership is held on either the Ethereum or Stellar blockchains by Securrency Transfers, Inc, the transfer agent. Investors will also be able to initiate their own approved transactions and keep track of the shares on the blockchain in their supported blockchain wallet.
“Blockchains can allow for atomic settlements (where software ensures that assets are exchanged in settlement) as opposed to other potentially riskier settlement processes, such as delivery-for-payment (DvP),” Peck wrote, talking about the benefits of blockchain technology. “The programmable nature of blockchains and tokens allows for code-based enforcement of rules in financial processes as we have seen in many DeFi projects, which has the potential to make financial transactions more rule-based and predictable.”
Traditional commerce goes digital with WTSY
The fund is a 1940-Act registered product just like a more traditional mutual fund and does not invest in any cryptocurrencies: instead, it takes the bookkeeping and ability to trade shares individually to the blockchain through WisdomTree Prime’s digital wallet application. The app is currently still in beta and offers access to a wide range of crypto assets, but interested advisors and investors can register on the waiting list here.
Although it will have the ability to trade on the blockchain, due to the mechanisms and regulations surrounding registered securities in the US, digital trades will not be able to be done anonymously as many have come to associate with crypto. It will open up individual investors to trade shares of the fund on the blockchain and keep track of it in their digital wallets, and is a major, innovative step in bringing traditional finance into the realm of the digital economy.
“When our CEO and founder, Jono 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 access to digital assets,” Peck explained.
“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.”
WTSY will not bear any shareholder administration fees on its own, but WisdomTree affiliates are expected to charge other fees, such as for facilitating transactions.
For more news, information and strategy, visit the Modern Alpha Channel.
