WisdomTree CEO Says Crypto Is 'Natural Evolution' of ETF Products

AUSTIN, Texas – Crypto is the next evolution of exchange-traded funds (ETF) and exchange-traded products (ETP), WisdomTree CEO Jonathan Steinberg said at “Planting the Seeds of a New Financial System," a conversation with CoinDesk Editor-in-Chief Kevin Reynolds on the mainstage at Consensus.

“What we were looking for is what can do to ETFs what ETFs did to mutual funds,” said Steinberg.

He said a world in which the blockchain enables investors to buy treasuries with additional functionality would have “great appeal” to mainstream users, which is why the New York-based asset manager is preparing to launch a crypto wallet on the Apple App Store in the second quarter this year.

Read full coverage of Consensus 2023 here.

The wallet will enable trading of tokenized real-world assets such as gold or real estate, said Steinberg. And he sees this as a huge advantage to holders of illiquid assets: “We thought through tokenization and blockchain-enabled finance that you could add functionality … When you put tokenized, physically backed gold with peer-to-peer exchange and payments, gold now becomes currency, like it was hundreds of years ago.”

Steinberg said that such a wallet doesn’t exist in the market yet. “Tokenized securities don't yet have a venue to launch on,” Steinberg said. “Anyone with a brokerage account could buy an ETF without paperwork and that's pretty democratized but nothing's more democratized than your smartphone. You can reach virtually the whole world,” he said.

“So for Wisdom Tree, it's just building on a new channel, building on our strength in bringing exposures to the market in a safe and compliant way and we'd like to try to do the same thing for crypto as well.”

WisdomTree’s embrace of crypto as the next evolution of ETFs is controversial, Reynolds said during the onstage interview. He brought up that an activist shareholder has nominated three candidates to the board and criticized the crypto wallet WisdomTree Prime.

“It's wonderful to have the opportunity to share our vision with shareholders …. But nothing will have the effect of actually launching” the wallet, he said, “which is really just the beginning of the journey.”

WisdomTree, which announced this month that it cracked the $90 billion asset-under-management mark, currently has nine crypto funds approved by the U.S. Securities and Exchange Commission that invest in traditional assets such as U.S. Treasuries. Users will be able to access these funds through the WisdomTree Prime wallet once it launches.