WisdomTree: Integration of Blockchain Technology into the ETF Ecosystem

WisdomTree: Integration of Blockchain Technology into the ETF Ecosystem

by March 3, 2020

WisdomTree Investments, an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager announced its strategic investment in Securrency, a developer of institutional-grade blockchain-based financial and regulatory technology.

Through this investment and its collaboration with Securrency, WisdomTree plans to pursue the integration of blockchain technology into the ETF ecosystem to bring the benefits of ETFs to a broader range of investors and improve the investor experience.

Securrency raised $17.65 million in a Series A funding round, which was led by WisdomTree as a strategic investor. Other participants in the round include the Abu Dhabi Investment Office (ADIO), Japanese financial services giant, Monex Group, Inc., and venture capital firms RRE Ventures, Strawberry Creek Ventures, and Panthera Capital Investments.

WisdomTree was founded on the idea that there is a better way to invest. During a time when mutual funds were the preferred investment vehicle, WisdomTree delivered on its mission to develop better investment strategies in a more efficient structure, ultimately launching ETFs for investors that offer thoughtful innovation, smart engineering and redefined investing. WisdomTree’s early identification of the superiority of the ETF structure was critical to its success.

Today, WisdomTree believes that there are elements of blockchain technology that can be incorporated into the existing ETF ecosystem to expand the audience for ETFs and improve investors’ experience. Specifically, WisdomTree believes that certain current applications of blockchain technology are neither meeting the highest standards of compliance nor delivering the strongest possible user experience under a sound governance structure.

As an experienced asset manager and leader in certain core asset classes, WisdomTree is uniquely positioned to improve upon existing operating models through innovation within the existing ETF ecosystem. WisdomTree expects these innovations to be compliant with existing laws and regulations, including applicable securities laws, in the U.S. and various jurisdictions.

Securrency’s blockchain-based market infrastructure technology provides a universal identity and compliance framework and unique interoperability to facilitate global liquidity. The company is a pioneer of blockchain-based financial markets infrastructure technology centered on its unique identity and compliance framework to support global digital securities transactions.

Securrency’s proprietary, patent-pending Compliance Aware Token technology provides multi-jurisdictional compliance and unprecedented convenience to financial services providers and market participants to facilitate the issuance, trading, and servicing of digital securities and other digital assets. Securrency’s technology is blockchain-agnostic and its compliance and policy-enforcement tools support ledger-to-ledger transactions across multiple blockchains.

Jonathan Steinberg, WisdomTree Founder and CEO, said,

“Our investment in Securrency is the result of a multi-year review of blockchain technology and the associated landscape. In our review, we found instances of unnecessary applications of the technology and poor compliance with existing regulations; however, there are numerous elements of blockchain technology that, when correctly applied, will bring benefits to investors. Using the technology, we believe we have identified areas for exciting innovation within the ETF ecosystem and in financial services more broadly, all with a focus on meeting the highest standards of regulation.”

Steinberg continued,

“Securrency’s leadership team has a unique combination of U.S. national security experience, technical expertise and financial services knowledge. We are confident that these attributes, together with its focus on compliance, will empower Securrency to be the leading technology firm in the disruption of financial services infrastructure through the industry’s adoption of blockchain technology. Identity, security and compliance will be critical features in the evolution of financial services. Our collaboration will demonstrate these features, and we are excited to pursue this endeavor with Securrency.”

Dan Doney

Dan Doney

Dan Doney, CEO of Securrency, said,

“WisdomTree has a well-deserved reputation as an innovator within financial services, and we are thrilled to have them as our lead investor. WisdomTree has truly exciting applications for our technology. Our partnership with WisdomTree will allow us to demonstrate unique features of our technology, specifically our Compliance Aware Token framework and multi-ledger capabilities.”

WisdomTree’s investment in Securrency is separate from WisdomTree’s listing of a physically-backed Bitcoin ETP in Switzerland.