WisdomTree CEO: ‘I Am All In On Defi’

By November 23, 2021DeFi
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  • WisdomTree held its third quarter earnings call on October 29th where a key focus was around growth initiatives for today and for tomorrow.
  • WisdomTree’s deep understanding and prioritization of first principles like transparency, disclosures, and consumer protection are all critically aligned with regulatory goals.
  • WisdomTree is in the business of transparent exposures, whether we're doing it in regulated tokens or through ETFs.
Bitcoin cryptocurrency background. A bunch of golden bitcoin, Digital currency
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WisdomTree held its third quarter earnings call on October 29th where a key focus was around growth initiatives for today and for tomorrow. In the core business today, that means bringing new ETFs and sophisticated model portfolios to market. To prepare for a transformative future where financial services begin to migrate onto the blockchain, WisdomTree will be an early leader with tokenized assets and a blockchain-native wallet.

WisdomTree’s deep understanding and prioritization of first principles like transparency, disclosures, and consumer protection are all critically aligned with regulatory goals, so we are uniquely positioned to offer a still early-to-market and easy-to-use DeFi access point without the contentious regulatory relationship.

To underscore that point, we’d point to an exchange on our earnings call between a sell-side analyst and our Chief Executive Officer, Jono Steinberg, that we believe provides important context about the future of financial services and where WisdomTree fits.

The last two questions of the earnings call came from Goldman Sachs Analyst Ryan Bailey. We edited responses for clarity of discussion.

Bailey: I think WisdomTree has always been a business that's evolved. You've transitioned from being an index creator to a pioneer in the ETF space, in particular, smart beta. So my question is, are we at a cusp of the next evolution of the business? And if we were to roll forward, say, five years, is WisdomTree going to be a DeFi business that has ETFs? Or an ETF business that's pioneering DeFi? Or is that just completely the wrong characterization?

Jono Steinberg:

WisdomTree really has been a business that has evolved. We started as a financial media company, Individual Investor Group, transitioned to ETFs when I saw how transformative they were for the investing process.

I would say that I am now personally all in on DeFi.

I say that because I believe it's going to meaningfully change the user experience for the positive; and from a business standpoint, transform the economics of financial services.

I believe that over the next five years, we will be recognized as a DeFi business that has an ETF business.

Said a different way: WisdomTree is in the business of transparent exposures, whether we're doing it in regulated tokens or through ETFs.

I think they'll prove to be quite complementary. We are 30 years into ETFs and yet the mutual fund industry is still very, very strong. I remain very bullish on ETFs.

But when I think about where WisdomTree stacks in the competitive set: we were early in ETFs, but we were 13 years after State Street and 7 years after iShares.

Here, we have a chance to be first through the door with this new wrapper.

I really see a massive opportunity.

I think that's what we'll be defined as over time, a DeFi company.

Bailey: Got it. And to make sure I am thinking about this, right, by having a well-established and scaled ETF business, the moment you have the mechanism or platform, you will start pioneering DeFi?

Jono Steinberg:

For starters, they’re very complementary. What has us so excited about this new journey was how well our core business mapped to the future.

We’ve communicated that we’re spending $4 million on digital assets in 2021.

We’re trying to be as efficient as possible to help maintain our margins.

We’ve been asking a number of people to wear two hats. We’re transitioning to building a pure Digital Assets team and we have eight or nine people in that space now. It’s very, very helpful.

The expertise that we have as the third largest gold manager in the world makes what we’re going to do on gold tokens very important and that works the same for tokenized treasuries.

And one of the things that DeFi needs is responsible DeFi, which means regulated DeFi.

The market needs to get things through regulators and—that really is one of our strengths.

I think the regulators are viewing WisdomTree in this new world as a trusted solutions provider and so we’re really trying to work out the issues, because obviously the standards can’t be different in a digital asset world.

You need to be maintaining the foundational principles of regulation of “know your customer” and anti-money laundering and disclosures. And all of those things that make financial services trustworthy, have to come over to the new world order of distributed ledger tech and so we think we can be that bridge brand that could pull this off.

Important Risks Related to this Article

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In addition, different crypto assets exhibit different characteristics, use cases and risk profiles. Information provided by WisdomTree regarding digital assets, crypto assets or blockchain networks should not be considered or relied upon as investment or other advice or as a recommendation from WisdomTree, including regarding the use or suitability of any particular digital asset, crypto asset, blockchain network or any particular strategy. WisdomTree is not acting and has not agreed to act in an investment advisory, fiduciary or quasi-fiduciary capacity to any advisor, end client or investor, and has no responsibility in connection therewith, with respect to any digital assets, crypto assets or blockchain networks.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

Asset Management/ETF Provider, Currency, Global Equities, fixed income

Contributor Since 2011

WisdomTree launched its first ETFs in June of 2006, and is currently the industry's fifth largest ETF provider. The WisdomTree Seeking Alpha profile will feature content by some of our leading analysts including: Luciano Siracusano: Luciano Siracusano is WisdomTree's Chief Investment Strategist and Head of Sales. He is the co-creator with CEO Jonathan Steinberg of WisdomTree's patented Indexing methodology and has led the firm's sales force since 2008. Luciano is a regular guest on CNBC and FOX Business, and speaks frequently on ETFs, indexing and global financial markets. A former equity analyst at ValueLine, Luciano began his career as a speechwriter for former New York Governor Mario Cuomo and HUD Secretary Henry Cisneros. He graduated from Columbia University with a B.A. in Political Science in 1987. Jeremy Schwartz: As WisdomTree’s Director of Research, Jeremy Schwartz offers timely ideas and timeless wisdom on a bi-monthly basis. Prior to joining WisdomTree, Jeremy was Professor Jeremy Siegel's head research assistant and helped with the research and writing of Stocks for the Long Run and The Future for Investors. He is also the co-author of the Financial Analysts Journal paper “What Happened to the Original Stocks in the S&P 500?” and the Wall Street Journal article “The Great American Bond Bubble.” Christopher Gannatti: Christopher Gannatti began at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. He is involved in creating and communicating WisdomTree’s thoughts on the markets, as well as analyzing existing strategies and developing new approaches. Christopher came to WisdomTree from Lord Abbett, where he worked for four and a half years as a Regional Consultant. Rick Harper: Rick Harper serves as the Head of Fixed Income and Currency for WisdomTree Asset Management, where he oversees fixed income and currency products developed through our collaborations with the BNY Mellon Corporation and Western Asset Management. Rick has over 19 years investment experience in strategy and portfolio management positions at prominent investment firms. Prior to joining WisdomTree in 2007, Rick held senior level strategist roles with RBC Dain Rauscher, Bank One Capital Markets, ETF Advisors, and Nuveen Investments. Bradley Krom: Bradley Krom joined WisdomTree as a member of the Fixed Income and Currency team in December 2010. He is involved in creating and communicating WisdomTree’s thoughts on currency and fixed income markets, as well as analyzing existing and new fund strategies. Prior to joining WisdomTree, Bradley served as a senior trader on a proprietary trading desk at TransMarket Group. Tripp Zimmerman, Research Analyst Tripp Zimmerman began at WisdomTree as a Research Analyst in February 2013. He is involved in creating and communicating WisdomTree’s thoughts on the markets, as well as analyzing existing strategies and developing new approaches. Prior to joining WisdomTree, Tripp worked for TD Ameritrade as a fixed income specialist. Tripp also worked for Wells Fargo Advisors, TIAA-CREF and Evergreen Investments in various investment related roles. Tripp graduated from The University of North Carolina at Chapel Hill with a dual degree in Economics and Philosophy. Tripp is a holder of the Chartered Financial Analyst designation. Jonathan Steinberg, CEO Prior to establishing WisdomTree, Jonathan founded, and served as Chairman and CEO of Individual Investor Group, Inc. From 1998 to 2004, he held the role of Editor-in-Chief of Individual Investor and Ticker magazines. Before his entrepreneurial accomplishments, Jonathan was an Analyst in the Mergers & Acquisitions division at Bear Stearns & Co. He attended The Wharton School at the University of Pennsylvania and is the author of Midas Investing, published by Random House in 1996. Zach Hascoe, Capital Markets Zach Hascoe began at WisdomTree in August 2010, and works directly with David Abner, Head of Capital Markets. The Capital Markets group is involved in all aspects of the WisdomTree ETFs including product development, helping to seed and bring new products to market, as well as trading strategies and best execution strategies for the client base. Zach works closely with the trading and liquidity community and does analytics on ETF baskets and the capital markets. He is a frequent contributor to the WisdomTree blog on topics related to the capital markets, liquidity, structure and best execution. In addition, he manages the hedge fund relationships for the firm. Zach received a B.A. from Bucknell University and was Captain of the Bucknell Tennis Team.

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