WisdomTree Tokenized Money Markets, SEC Exemptive Relief, and Tradfi Coming to DeFi

Hey. Good morning, William. We've we've seen WisdomTree in the new news quite a lot recently between USDW, and then your tokenized money market fund as well. So I guess diving into this, you know, I was looking at your LinkedIn before the show. I I've seen you were at WisdomTree, I think, going on eleven years now. How has the evolution been from eleven years now to being the head of digital assets and and bringing some of these products to market? Yeah. Sure. Like?

Yeah. For sure. So, you know, WisdomTree is an asset manager ETF sponsor. And, you know, so I've been at the firm for eleven years now. We launched our first ETFs twenty years ago. So a little more than kinda half the company's current history I've been here. And, you know, WisdomTree was really founded kind of with the idea of, like, there's a better structure that's ETFs, and there's a better way to kind of do indexing, and that's the indexes that WisdomTree created.

But, know, on that first point, you know, ETFs have taken in the vast, vast majority of inflows over the past two decades compared to mutual funds. They're really, like, eating the world in asset management. And we view digital assets tokenization as kind of an extension of that core capability that we've got. You know, kind of understanding, like, wrappers, product structuring, and bringing that same sort of expertise on chain.

So, you know, I think the great example of this is just last week, we got a very kind of critical exemptive relief from the SEC that allows our largest product on the digital asset side, a tokenized money market fund, WTGXX, to trade and settle on a $24.07 t instant basis. So this is really a big unlock for the space broadly. It's the first time within certainly The US regulatory perimeter.

And I think you can say broadly that a tokenized money market fund can trade this way, allows it to kind of integrate much more seamlessly with stablecoin workflows that are out there, where you can have a yield bearing instrument like WTGXX sit alongside and transact directly with stablecoins and do it not just on a once a day batch settlement basis, but on a true 20 fourseventy instant basis, really opens up a lot of use cases and workflows that can happen with stablecoins around treasury management, collateral use cases.

So that's a big unlock for us, and it kind of leverages kind of our core ETF kind of competencies and knowledge that we've got. So it's something that we're, very excited about.

When would you say these these conversations started happening? You know? Because we we I think a lot of times in this space, it feels like it happens overnight. But but when did this conversation start happening maybe a little bit even for you personally, but maybe even internally internally at WisdomTree with these products?

So I have been running, this digital assets group since, probably about, you know, fall, maybe really actually spring twenty twenty one. So, it's been, something that kind of we've been investigating even before COVID as some stuff was starting in the space. And then we really gained conviction. Me and a couple other colleagues kinda left our day jobs, we like to say, and started focusing on this full time at WisdomTree, created a dedicated team, dedicated business unit working on this stuff.

For me, it wasn't like I had any sort of I was just open minded on new technology. Right? I wasn't kind of somebody who was, like, hardcore into crypto in my own personal time. It was just a matter of, hey, this seems like there's something here. I accept kind of the potential for technology to disrupt the current way of doing things, certainly in capital markets, asset management. And just being open minded on that, that led us to kind of really see the future here and invest in building out these capabilities.

And so when you talk about building out those those capabilities and building out this stablecoin ecosystem, I was I was just talking about a cap protocol a bit. Yep. What what's the foundation for that? How should WisdomTree, you know, users, people that are custodying and and, you know, holding the WTGXX right now, how are they looking at it? How should they evaluate, you know, interacting with protocols like CAP?

Because, you know, it it can be a little a little daunting going into the world of DeFi, but I think, you know, DeFi Dave over there has has done a great job at really trying to, I'd say, professionalize DeFi in a way and show show the traditional financial institutions that, you know, these these are valid products. These are things that you should be taking a look at. So how how that relationship come about?

Yeah. You know, we've got a a great relationship with CAPP, And, I think, you know, kind of talking about this more like, what is, like, kind of traditional regulated kind of tokenized assets like WTGXX or other things that we have? Kinda how should they integrate and work with DeFi. Right? And and I think what I how I see DeFi, how I think about it is, in one case, it's, like, certainly serving, like, a lot of on chain investing use cases today. Right?

Generally, like, people have you know, it could be something, like, they're looking to get leverage. You know, people have talked a lot about these looping strategies in real world assets. And, like, that's great.

What I think is really interesting is, like, how do these, like, taking this kind of, like, software driven kind of financial services, right, where you've got essentially kind of self executing code that's able to execute financial services contracts that have otherwise kind of been relying on people or other things like that. How can you take that kind of software and apply it to other parts of financial services, including within, like, more wholly regulated constructs? Right?

So I think things like, what CAP is doing, kind of what other DeFi protocols are doing are kind of great examples of that. And just showing the potential for, hey, you've got a fund. Right? You've decided you've onboarded WisdomTree. You're now holding a tokenized money market fund using it as part of your workflows. What are some of the other potential ways that this can kinda help you get more utility out of your value? Could be things like instant trading. It could be things like using it as collateral for loans.

I've heard lots of interesting examples both on the investing side and also even things on, like, the payment side, merchant acquirer side around how these types of protocols can kinda add value there. So we're in the very early innings of that, and we're very interested in kind of exploring even beyond just, like, the current universe of people who are using DeFi for leverage or things like that.

So so where are you exploring? Like, what kind of peaks your years? Because obviously, I'm not giving away too much, but, you know, what what peaks your your your interest,

you know, going into the rest of this year? Or maybe if you were to be at a conference, what would be something that you're like, you know, this is this is a rabbit hole I wanna go down a little bit more. Yeah. In our 2026 outlook so WisdomTree's had a lot of growth in the digital as tokenized asset space in just the past, you know, twelve months. I'd say at the beginning of twenty twenty five, we were at about $30,000,000 in assets. Today, we're at close to $800,000,000 in assets. So Congratulations.

Strong growth in, like, the past twelve months. Thank you. And, you know, lot of that's just been driven by client use cases, whether it's, you know, stablecoin issuance or tokenized asset issuance, could be treasury management using stablecoins, collateral use cases within financial services, and just really on chain investing. So people who are looking to remain on chain and access to other, whether it's yield bearing or diversifying assets.

So it's all those things that's allowed us to kind of grow over the past years to, like, the 800 ish million where we are today. Really, what I think, like, the next leg of growth is gonna be, it's I really highlight two things in my 2026 outlook. It's liquidity of fund shares. Right? So exactly what we did with WTGXX, making these things more tradable and kind of work better within crypto native or stable coin native workflows.

That's like a lot of people in tokenization have talked about this in concept, but it's always been in concept. And I think for the first time and why we're so excited about it, with WTGXx, we're able to actually go out there and demonstrate this real utility, real true twenty four seventeen instant settlement. The second piece is really around these are all permissioned assets. So there needs to be kind of a growth of people that are eligible to participate in permissioned assets.

This could be things like, you know, forms of, like, digital identity, not like a state led version, but, like, the ability for people to kind of selectively share information with different financial service providers. It could be attestations, but just making onboarding easier for everyone in the space.

I I think as we're looking to bring kind of DeFi concepts, you know, that we're seeing to kind of regulated kind of within the regulatory perimeter assets that require people to be, like, identified, that's something that's gonna need to happen as well. So it's really, you know, making these exposures more liquid and tradable, that onboarding concept. Those are the types of things that we're really focused on in 2026.

And so I'm curious about how you would approach a conversation to, you know, a legacy WisdomTree user, or client. And, you know, if we talked about this recently in an interview with with Thomas Cowan, he's the head of tokenization at Galaxy, and really the difference in the market and the need for stablecoins like USDW and then also the need for tokenized money market funds like WTGXX. Do you do you guys have a shortened, like, acronym for that? Like

No. We just use WTGXX.

Yeah. Yeah. How how do you approach you know? Like, because I can imagine some people, they say, like, why isn't a stablecoin enough? Where do these two fit in into the eco ecosystem? And how would you explain the difference to maybe somebody entering the conversation?

Yeah. So USDW is really just used as kinda like the cash rails, the transaction rails within WisdomTree's own ecosystem. It's not kind of available broadly yet or anything like that. WTGXX, on the other hand, is kind of we're seeing lots of people come in with different stablecoins. We support USDC and PYUSD transactions. So, really, the reason that you'd wanna hold a tokenized money market fund compared to a stablecoin, The primary reason people wanna do that is yield. Right?

Is that especially in light of kind of the current conversations with Clarity app, rewards programs may not be allowed. Rewards programs also don't, like, scale particularly well is what I'd say. And there isn't the ability for you to if you're holding in self custody or kinda depending on where you're holding it, you might not be able to, as an end user, get kind of yield on your stablecoin balances. Polkaday's money market funds have kind of a clear they clear regulatory construct.

The way they pay yield, you know, you're getting the whole yield, just less a management fee. That's kind of a charge for operating the product. So you kind of know that you're getting close to, like, what the prevailing yield rates are. So there's a lot of compelling reasons. There's also a very good model for custody and independent oversight of money market funds issued under the 40 act. So there are a lot of compelling reasons why people might wanna use a tokenized money market fund. You know?

But, really, kinda just going back to your broader question, Zach, it's like, why are people using these things anyway? It's not about replacing kind of, like, current traditional assets that kinda sit there as well. Like, our pitch is not a substitution for, like, a money market fund that you're buying in your Fidelity account. It's really saying, like, hey. You've got you're you're using Stablecoin in crypto. You've got a wallet.

These are the other things that you can do with that that fit within what you're trying to achieve. Or these are, like, why tokenized assets like our money market fund can kind of work better for you in terms of what you're looking to get out of your stablecoin and kind of on chain financial services. That's the customer journey that we see. We don't see it as like a substitution for kind of Yeah. Existing assets that are good sitting on the traditional side.

We view it as kind of creating a new user experience, serving new use cases that otherwise just aren't possible within traditional financial services.

Man, that's awesome. I guess anything anything you wanna leave leave a, you know, a stable coin focused listener with as as we head on to 2026 and and we prepare to bring on, Anjali from, Paxos Labs? Yeah. I mean, you guys have kinda highlighted USDW

in in headline, but, really, WTGXX is, this is a big unlock for this. So if you're an issuer, somebody's doing business with stablecoins, you should talk to us. You can find, you know, me on LinkedIn, Twitter, lots of place at x. But, you know, wisdomtree.com's got all the information as well. So people should come talk to us. We think, it works really well for people and their workflows.

Awesome. Well, Willem, thanks for coming on the show. I hope to have you on in the future as continues to pave the way here. Please keep us in mind as any news comes on because that's what we want this platform to be. When news breaks, come on, break it down, and and we wanna keep that cycle going. So it's great to meet you, and and thanks for coming on the stream.