WisdomTree triples down on future blockchain focus

WisdomTree executives went so far as to say that blockchain-enabled digital wrappers are the future of asset management – ​​while the ETF-focused fund group is set to launch its digital asset consumer app in the first quarter of 2023.

Company executives on Friday doubled down on the shift to focus on digital assets during WisdomTree’s earnings call, reiterating its goal of bringing fixed income, stocks and commodities into the digital world through blockchain-enabled funds and tokenized exposures.

“Crypto is interesting, but the real opportunity is blockchain-enabled finance,” Chief Operating Officer Jarrett Lilien said on the call. “It’s a mistake to confuse crypto, which is one application of the blockchain … with the broader opportunity we’re pursuing.”

CEO Jonathan Steinberg said that in addition to dropping “Investments” from the name, the company will change its ticker from WETF to WT.

Although the company has 78 U.S.-traded ETFs with roughly $52 billion in assets under management, according to ETF.com, the CEO said the adjustments were “a nod to our natural evolution and history of innovation” as the company looks to expand.

The company’s assets under management fell to about $71 billion in the third quarter — down 4.6% from the second quarter — due to the market downturn. It has since rebounded to nearly $75 billion, partly due to net inflows of $1.8 billion in October.

Its crypto assets under management rose slightly from $151 million as of June 30 to $163 million at the end of the third quarter. Net flows in the segment, which totaled $41 million in 2022 as of Sept. 30, were flat last quarter.

The company posted adjusted earnings per share of $0.06, which was in line with estimates. WisdomTree’s share price, which is down approx. 16% year-to-date, was down 1.5% on the day at 12:30 a.m. ET.

Blockchain-focused product development

Executives said on the call that the company’s blockchain-native financial services mobile app, WisdomTree Prime, is in beta testing and on track for a national rollout by the end of the first quarter of 2023.

WisdomTree CEO Jonathan Steinberg said the company has spent roughly $20 million so far on its tokenization and WisdomTree Prime efforts. Company executives declined to comment on the app’s number of beta users or transaction volumes so far.

The firm also received SEC approval to launch its Short-Term Treasury Digital Fund last month – an offering that digitizes the fund stake on the Ethereum or Stellar blockchains. Executives have said the fund is a first step toward bringing traditional financial assets into the digital ecosystem and allowing blockchain rails to improve the investor experience, such as through near-instant settlement settlement.

WisdomTree has applied for nine additional funds to be part of a blockchain-enabled fund suite that includes fixed income and equity strategies, executives revealed.

Such offerings are expected to be available only through WisdomTree Prime initially, according to Will Peck, the firm’s head of digital assets.

Travel to a US spot bitcoin ETF

WisdomTree’s proposed US spot bitcoin ETF was rejected by the SEC last month, a familiar outcome for all asset managers who have tried to bring such a product to market.

Grayscale Investments is moving forward with suing the SEC to deny the company’s proposal to convert Bitcoin Trust (GBTC) into an ETF.

Peck said Friday that the firm has no plans to join Grayscale’s lawsuit, adding that WisdomTree would instead look to “work productively” with the SEC.

“We know that regulatory concerns take time to resolve, and appreciate the due diligence in doing so,” Peck previously told Blockworks. “We recognize that this is a slow process, and we won’t let that stop us from innovating in other ways in the meantime.”

The company offers crypto ETPs, including a spotbitcoin product, in Europe.

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