WisdomTree's Has BIG Plans for Crypto ETFs & Tokenization with Will Peck

Episode Transcript
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Speaker 1 (00:04):
Hey, folks, we're recording at Chainlinks smart Con event and
joining me is Will Peck, who is the head of
Digital Assets at wisdom Tree. Well, great to.

Speaker 2 (00:13):
Have you, Great to be with you, Tony.

Speaker 1 (00:14):
Well we met, we were talking before the recordings at
the ONDO event, and crypto seems to be booming. You know,
what are your thoughts on how this market has grown?
The industry has grown?

Speaker 2 (00:25):
Yeah, I mean it's great.

Speaker 3 (00:25):
It's also it's interesting you mentioned the ONDO event smart Con,
which is you know, about much more than just like
crypto exposures on blockchains. Right, it's about using blockchains as
kind of infrastructure for financial services.

Speaker 1 (00:36):
Right.

Speaker 3 (00:36):
Crypto is infrastructure. Blockchain is infrastructure for more and more
real world finance. You know, maybe real world is not
like the perfect term, but like that's exactly what we're
seeing more and more of.

Speaker 2 (00:46):
That's what wisdom Tree is focused on.

Speaker 3 (00:48):
So feels like a lot of energy you know, at
these conferences in New York around that topic generally.

Speaker 1 (00:53):
And then you have a lot of trad fy now
looking to build with blockchain rails. They're launching et as,
they are tokenizing, they're launching stable coins. What are your
thoughts on how TRADFI has kind of taken over cryptow.

Speaker 3 (01:05):
Yeah, absolutely, so, I mean my role, I'm head of
Digital Assets at Wisdom Tree. So Wisdom Trees a global
asset manager ETF sponsor. We manage north of one hundred
and forty billion dollars globally today and the division I
head up is focused on tokenization and stable coins, stable
corn orchestration, and we manage about almost seven hundred million
dollars I think six hundred and eighty million dollars in

(01:25):
tokenized products. Our largest product is a tokenized money market
fund wtgxx that's available on seven public blockchains, which really
the use case is like providing a stable, yield bearing
alternative to stable coins, for example, where somebody might have
a lot of stable coins that aren't earning yield and
they've got you know, certain treasury management workflows or needs
that they might have, and our money market fund wtgxx

(01:48):
provides a great option for them to you know, diversify
get yield in this regulated exposure. So that's like kind
of the prime example today and we see it growing
quickly from here.

Speaker 1 (01:58):
Are you seeing a lot of demain and from clients
for crypto assets?

Speaker 3 (02:02):
Yes, I mean so you know, Wisdom Try is a
kind of the ETF business. We have, you know, a
bitcoin ETF here in the United States, and then we've
also got a suite of crypto exchange tare of products
in the European market, where we actually have a very
we were an early mover in that market, have a
very strong position there. So certainly there's demand from our
traditional clients in terms of crypto assets.

Speaker 2 (02:25):
That's a very competitive space.

Speaker 3 (02:27):
And then what we're seeing more and more what my
group kind of does is takes traditional exposures and brings
them into the kind of digital assets ecosystem right and
meets the needs of the on chain community who are
looking for kind of yield diversification, a host of services
that fund managers like ourselves can provide.

Speaker 1 (02:45):
What are your thoughts on the Trump administration opening up
four to one keys to be able to invest into
different assets, including crypto What does that mean for your
business from an ETF standpoint?

Speaker 2 (02:55):
You know, it's interesting, kind of it's funny.

Speaker 3 (02:57):
ETFs have been talked about going four to one k's
for a long time. It's definitely happened because the things
that ETFs kind of solve for weren't necessarily relevant in
the four one k which is historically been dominated by
mutual funds, and cis kind of getting very into the
specifics there.

Speaker 2 (03:14):
So it's interesting what is happening the d L.

Speaker 3 (03:17):
I guess opening up four one k's for kind of
crypto and other assets. Not like a huge impact for
Wisdom Trues business today, necessarily sure, but just kind of
a signifies the kind of openness to innovation that we're
seeing now from the federal kind of administration and regulators.

Speaker 1 (03:34):
Absolutely. Now you mentioned you have a bitcoin et P product.
I'm assuming you have a theory M.

Speaker 3 (03:39):
And in Europe we've got off suite of products.

Speaker 2 (03:42):
In the US, we just have a bitcoin ETF.

Speaker 1 (03:44):
So my next question will be are you planning to
expand beyond bitcoin?

Speaker 3 (03:47):
Yeah, I mean I can't really comment as a matter
of policy on our product development pipeline, but you know
we're certainly you know, you could read filings out there,
things like that that Wisdom Trees involved in. But I
think big picture, you know, it's certainly a very competit
space in the US, and you know we want to
put our you know, both good product development for the firm,
good things for the firm, and also good things for
our clients in terms of stuff we do.

Speaker 1 (04:09):
What are your thoughts on the SEC's recent update to
the generic listing for the ETFs? Is that good?

Speaker 2 (04:15):
Bad?

Speaker 1 (04:16):
Oh?

Speaker 2 (04:16):
I think that's good.

Speaker 3 (04:16):
I mean, I think it's kind of funny the ETFs
you dated back historically. So I've been at Wisdom Tree
for eleven years, like I was saying before we got
on the air, and certainly seen a lot of changes
in the ETF industry in that time, and I think
generic listing standards are certainly helpful. Means that people don't
need to go through kind of the nineteen before process

(04:37):
like they historically need to do in the pasture, which
was just a limiter in terms of doing things that
didn't meet these generic listing standards. So I think that's
good for crypto ETFs. I think the more and more
that the ETF industry and the regulators can get around
these sorts of standards that allow products to be list
it just levels the playing field and allows you know,
like innovative ETF firms to come up with product I

(05:00):
meet consumer needs and they can compete on the merits.

Speaker 2 (05:02):
Otherwise it can become hard to behind the scenes.

Speaker 1 (05:05):
Now you mentioned you're handling or doing tokenization of assets
as well, right, and assistain clients to do that. Does
it make sense for tokenized assets eventually find our way
into ETFs or not necessarily?

Speaker 2 (05:17):
You know, it's a good question.

Speaker 3 (05:18):
I mean, I think we're seeing a convergence between these
two things, and it'll be.

Speaker 2 (05:22):
Interesting exactly how we get there.

Speaker 3 (05:24):
I mean, what youuts really are is there a rapper
that allows, you know, a investment vehicle to be listed
on a national securities exchange trade in the secondary market
that invests in some sort of underlying asset, right, and
that the price between the ETF share is kept kind
of in line with the value of the underlying asset
through the creation redemption mechanism, through arbitrage by market makers,

(05:47):
and that vehicle, that rapper has proven incredibly powerful in
terms of bringing kind of liquid exposures to investors just
investors within the workflows that they have. In fact, it
actually brings even more liquidity to certain exposures like corporate
bonds for example.

Speaker 2 (06:03):
So you know, the ets has been very powerful.

Speaker 3 (06:06):
I think it's interesting with tokenization, where you know, in
what you need to think about the specific use cases
and problems you're solving for. But there's no need, Like,
there's no reason to think that, Like, if you're bringing
a novel asset that's tokenized, let's say it's a digitally
native issued company in the future, there's no reason a
ETF couldn't hold that if it were liquid.

Speaker 1 (06:22):
I recently read that wisdom Tree debuted fourteen tokenized funds
on the Plume blockchain. Yep, tell us about those funds
and why to Plume block.

Speaker 3 (06:31):
Yeah, so wisdom Tree's got fourteen tokenized funds total. We've
tokenized them now on seven different public blockchains. So these
are the same funds that are now available on Plume
as well. Got it, and so Plume Railroad asset focused
EVM blockchain that's really trying to drive adoption of real
world assets within kind of crypto workflows. Kind of a
nice mapping for wisdom Tree as well. So there was

(06:54):
you know, we saw the kind of synergy there, the
streets of alignment, we had customer demand for it, and
so we tokenized our funds on Plum and we're very
excited about it.

Speaker 1 (07:03):
That's awesome. And then recently you appoint it be and
why the world's largest custodial bank and oldest bank in
America for digital assets infrastructure. Tell us about that partner.

Speaker 2 (07:14):
Yeah, so B and Y is actual Wisdom Tree has
a long history with B and Why.

Speaker 3 (07:17):
They do a lot for us as kind of a
fund manager as they're and they do like custody you know,
backend servicing, sub advisory for us. So this is an
expansion of our overall relationship with B and Why. And
really the reason we did it is that, you know,
we've got a retail app in the US, wisdom Tree Prime,
that allows people to onboard through kind of a traditional
onboarding process and then access all of wisdom trees tokenized funds,

(07:40):
tokenized assets in there, and you can also move them
off platform. So you could open up a wisdom Tree
Prime account, buy that money market fund like I said,
and then move it into your own meta mask while,
which to me is a very cool new user experience,
sets up peer to peer transferability, defied composability, things like that. Sure,
So what B and Y is allowing us to do
now is providing the banking rails within that ecosystem. Now,

(08:00):
within wisdom Tree Prime, you've got both banking connectivity, so
you can move money from your chase, your ba A
account into wisdom Tree Prime. You also can move money
over blockchain rails like USDC PY, USD into wisdom Tree
Prime and out of wisdom Tree Prime. So that kind
of connectivity between the fiat rails and the blockchain rails
is really what we're unlocking there. So I'm extremely excited

(08:20):
about it. We're looking forward to continue to grow this platform.
It just grows the number of people that can hold
and invest in our products.

Speaker 1 (08:27):
And I'm sure having the caliber of a b and
Y Melon as an infrastructure partner helps bring in a
lot more of the traditional investors. I mean, not trust
certain crypto native firms, not necessarily that they're doing anything wrong.
But there's bny Melon, it's been around for a long
time versus others.

Speaker 3 (08:43):
Yeah, I think big picture, you're seeing a convergence, right,
Like I've heard the line, it's not trad fy, it's
not DeFi it's just fine now. Yeah, where you're seeing
innovative but established firms like B and Y like a
Wisdom Tree is kind of maybe a more startup e
field than that. You know, we've only been in our
current for twenty years, but we're a listed company, you know,

(09:04):
traditional finance institution and you know, trying to innovate, move
things forward. And I think you're seeing more and more
of that as I stare at like fidelity banners all
around us, right, Like there's very much that attitude that
like traditional finance rooms are here to play in this
in a real way.

Speaker 1 (09:21):
For sure. What are your thoughts on the tokenization market
and how that's growing and expanding? It seems as a
race going on right now to tokenize equities, money market funds,
and so forth, like what you guys are doing, but
gold and other precious metals and even real estate.

Speaker 3 (09:37):
Yeah, so we're focused on the liquid side of things.
So we've actually have our own gold token, we've got
the money market fund, we've got equity funds, we've got
some alternative vehicles like private cred and alternative income done
in a liquid way. So like really doing what we've
done well with ETFs and kind of bringing similar type
exposures to the on chain market where there are real
benefits that come with that twenty four to seven liquidity.

Speaker 2 (09:57):
So look, this is.

Speaker 3 (09:59):
What I you on a daily basis, Like, uh, tokenization
we think is the future, and you know, right, now
really serving the crypto native community. I think going forward,
we're to see more and more people coming on chain
and tokenization is going to serve them in ways that
they just wasn't possible before. So, you know, like I said, managed,
you know north of six hundred eighty million or thereabouts today.

Speaker 2 (10:20):
And in a year, could we be at five billion dollars?

Speaker 3 (10:24):
I don't know, Like there's a there's an immense opportunity
in this new rapper, with this new technology. So we're
fully committed to it and looking forward to continue to
grow the market.

Speaker 1 (10:35):
When you're thinking about tokenization and the assets that you
want to participate with, and then you think of crypto
as a global asset class, real time instant settlement and
all that jazz runs twenty four to seven, are you
also thinking about what other markets can bring in liquidity
and things like that. Oh?

Speaker 3 (10:51):
Absolutely, I mean I think it's kind of funny, like
you think about like the an S and P five
hundred ETF for example, like there's actually it's interesting, there's
a different ETF and like the US versus the European
market versus like the Japanese market, that I'll invest in
the same S and P five hundred, right.

Speaker 2 (11:07):
And that's just naturally how this developed.

Speaker 3 (11:09):
But I think what you've seen with bitcoin stable coins
is you can have the same asset that can trade
globally twenty four to seven three sixty five, and so
I think that's the future and that's the direction of travel, right,
is can you bring global liquidity where the same asset,
the same markets can have somebody from the US trading
in them at ten am, you know, on a Friday,
and still open for somebody in you know, South Korea

(11:32):
to be trading at like eleven pm on a Sunday. Right, So,
like these are that's the direction of travel. It's what
Crypto's shown that things can be done very well. I
think there's a lot more market infrastructure that can come
into power that. But it's very much the direction of travel.

Speaker 1 (11:49):
And the other asset to Alrea. The other side of
that is we need clarity, We need the market Structure bill.
We know government is shut down right now, we're waiting
for that to open up and the Senate to pass bill.
What are your thoughts on the impact that we'll have
on the market in innovation?

Speaker 3 (12:04):
Yeah, it's a good you know, I think a lot
of people here have been talking about Clarity Act, and
you know, I think the general thing you're hearing from
people is that, particularly for traditional institutions, that clarity just
like having that regulatory clarity, gives them a lot of
ability to actually do more beyond just the POC stage.

Speaker 2 (12:22):
But like for a lot of us.

Speaker 3 (12:24):
We're all not just like sitting around waiting for something
to pass right, Like things have evolved such in a
way that to the Genius Act kind of just greater
kind of comfort around innovation that there's more you can do.
So like for Wisdom Tree, like our products are live today,
you can sign up for Wisdom Troup Prime. You can
if you're an institution, you can onboard with this stim
we connect access to these products. We think they are

(12:44):
a provide a great user experience for that sort of
on chain investing experience.

Speaker 2 (12:50):
And you know, we or off to the races.

Speaker 1 (12:53):
Well you probably can give all the details, but what's
on your road map? But what can we expect in
twenty twenty six?

Speaker 3 (12:58):
Yeah, I mean I think we spoke spoke a little
bit about this on my panel this morning. I mean,
at some level, I think getting our exposures to fit
more and more into crypto native workflows in a very
native way is of critical important for us, and I
think we've made a lot of progress there.

Speaker 2 (13:13):
We can keep making progress.

Speaker 3 (13:15):
And then also like I think there's a whole universe,
like these are all permissioned products right now, right like
they're not available for like permissionless products.

Speaker 2 (13:22):
But I think that I don't know if it's like
that barrier's dropping.

Speaker 3 (13:27):
But like the ability to serve more and more people
within the regulatory perimeter and doing it in a responsible
way and also a very user friendly use, good user
experience way is completely possible.

Speaker 2 (13:39):
So you know, there's gonna be.

Speaker 3 (13:41):
Panel tomorrow that Chain Links putting on around compliance and
things like that. So I think those two things going
forward is really what we're focused on.

Speaker 2 (13:50):
And also just continuing to grow AUM and adoption of.

Speaker 1 (13:53):
Our products well great stuff, looking forward to the future updates,
and we're gonna have to do a longer form conversation
at some point.

Speaker 2 (14:00):
I love that.

Speaker 1 (14:00):
But thank you so much for joining me, my.

Speaker 2 (14:02):
Pleasure, Thank you for having me.

Speaker 1 (14:03):
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(14:24):
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