WisdomTree CEO: Crypto Winter Brings ‘Many Opportunities’

Digital asset-focused investment manager WisdomTree sees opportunities to capitalize on crypto’s recent churns — including expanding the company’s regulatory prowess in a bid to land more clients.

WisdomTree, which offers a variety of ETFs, ETPs, indexes and model portfolios, ended the second quarter with $74 billion under management — down 6.4% from the previous quarter due to market write-offs.

The company’s asset decline came despite net inflows of $3.9 billion, largely due to flows into WisdomTree’s fixed income products. Assets under management within the firm’s crypto products fell about 60% from $383 million to $151 million despite net inflows of $3 million into those offerings.

WisdomTree’s operating income fell about 1% quarter over quarter to $77 million. Net income jumped from a loss of about $10 million in the first quarter to a gain of $8 million in the second quarter. The company’s stock price was $5.20 at 4:00 PM ET, down 1.7% for the day.

A continued focus on digital assets

Although the industry saw robust funding, ads during the Super Bowl and crypto firms promising “too-good-to-be-true” deals over the past year, CEO Jonathan Steinberg said on an earnings call Friday that the landscape has changed dramatically in recent years. months.

“While some companies have struggled with the realities of regulation and risk management, and other companies have completely lost the trust of their customers and investors, for WisdomTree, the timing of this crypto winter is very constructive and offers many opportunities,” Steinberg said.

Bitcoin and Ether are each down roughly 65% ​​from their all-time highs reached last November amid higher-than-normal inflation and turmoil for certain crypto companies.

Terra’s algorithmic stablecoin TerraUSD (UST) and its LUNA token crashed in May, rattling the crypto markets beyond those assets. Three Arrows Capital, Voyager Digital and Celsius have all filed for bankruptcy in the past month as they dealt with liquidity and insolvency issues.

“With these bankruptcies and these client losses, I think a lot of people don’t trust their peers in the crypto space the same way,” Will Peck, WisdomTree’s head of digital assets, told Blockworks in an email. “WisdomTree has a great brand, reputation and culture of risk management and regulation, and we will be well-served to pick up many clients for both ETPs, indices and WisdomTree Prime.”

Many of the firm’s clients in the US and Europe see the current market environment as a good entry point to get involved in digital assets, Peck noted.

WisdomTree Prime, a consumer financial app that the firm first revealed plans for in January, is in the initial stages of beta testing. It is designed to allow users to save, spend and invest in crypto-assets such as bitcoin and ether, blockchain-enabled funds and tokenized versions of physical assets, such as gold and US Treasuries.

The fund group has minted a dollar token, Steinberg said, adding that the minting of a gold token is “imminent”.

Initial beta users will be invited from the company’s waiting list, Peck said, adding that there will be “a measured rollout” over the coming months as the firm continues to get user feedback.

Executives said on the call that WisdomTree expects to see revenue from its digital asset initiatives beginning in 2023, but declined to comment on specific estimates.

“The ultimate goal is to deliver financial services to customers faster, cheaper and with better results than what exists today,” said the CEO. “Over time, we expect that all financial assets will eventually move onto the blockchain infrastructure.”

Only 3 days left to redeem our biggest DAS discount! Use code NYC250 to get $250 off tickets to attend crypto’s institutional conference.