We Will Be First to Bring Passive Investing to the Blockchain

WisdomTree will be the first asset manager to bring passive investing to the blockchain, the company’s CEO said, doubling down on past statements about the firm’s bullishness on the crypto space. 

The fund group eclipsed $80 billion in assets under management for the first time this month, executives said during a Friday earnings call. It plans to roll out its blockchain-native financial services mobile app, WisdomTree Prime, later this year.

Jonathan Steinberg noted the importance of being a first-mover, noting Vanguard’s pioneering of passive investing within the mutual fund wrapper and BlackRock’s iShares creating the first comprehensive passive suite of ETFs.

Vanguard manages about $8 trillion in assets, and BlackRock, the world’s largest asset manager, has more than $2 trillion within its nearly 400 US ETFs alone.

Steinberg said that virtually all financial assets, through tokenization, will eventually come to the blockchain. WisdomTree Prime is set to allow users to save, spend and invest in cryptoassets, such as bitcoin and ether, blockchain-enabled funds and tokenized versions of physical assets such as gold.

Companies that don’t adapt to the changing financial services landscape could resemble newspaper groups that failed to harness the power of the internet, he added, or camera companies that were replaced by smartphones.

“There will be spectacular winners and many who get disrupted and disintermediated out,” the CEO explained. “It is easy to envision a world where many of today’s leading financial services companies look like yesterday’s newspaper groups.”

WisdomTree is set to launch the beta testing of its new app during the second quarter. 

Steinberg said having a mobile financial app will be “table stakes” in 2023. He noted that some investors will likely use WisdomTree Prime as a neo-bank, while others will use it as a registered investment advisor (RIA) of sorts. 

“Regardless of how different consumers use it…by being first in tokenizing the underlying exposures and by being native to the blockchain in our design, WisdomTree will deliver unique and better functionality,” he said. “Nothing can potentially scale faster than a successful mobile app.” 

A glimpse at future products

Will Peck, WisdomTree’s head of digital assets, told Blockworks the company intends to launch more products in Europe, as well as enhance existing ones. He declined to comment on specifics.

WisdomTree added Solana, Cardano and Polkadot ETPs to various exchanges across the continent last month.

In the US, WisdomTree is one of many asset managers to file for a spot bitcoin ETF. The company amended its application for the fund in December, a week after the SEC rejected its proposal.  

Industry executives remain unsure when the agency could approve a spot bitcoin ETF, though most believe one won’t launch until 2023 at the earliest. 

The firm also filed in April 2021 to launch a Digital Short-Term Treasury Fund, which would have a record of share ownership digitized on the blockchain. The following month it revealed plans to launch an Ethereum trust.

While the outlook for a bitcoin ETF in the US remains “muted,” Jarrett Lilien, WisdomTree president and COO, said during the Friday earnings call, the firm launched a separately managed account (SMA) strategy for the US wealth channel.

“Consider that there are $30 trillion in assets in the US wealth channel alone,” Lilien said. “So even a 1% allocation to crypto in just the US would yield a $300 billion market opportunity for crypto exposures, and the realistic opportunity to be multiples of that.”

Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.