Why Walled Gardens Are About To Break (No Gardens)

Transcript

What is the vision for Yeah, what is the vision? >> How many more assets do you expect to pass [music] that 100 million marker? >> [music] >> But I mean tokenized money market funds are clearly the first example of product market [music] fit after stable coins, right? >> [music] >> Ladies and gentlemen, welcome to Convergences, the show powered by The Block and Token Relations talking about the convergence of legacy finance and on-chain finance. We're here today with Jacqueline. I'm Andy. And welcome to the show.

>> Yes, we're excited to be here and more importantly, we're going to be introducing our guest in just a second, but I think maybe a little background on this why we decided to launch Convergences. It's basically a simple thing. Everyone's using the term the conversation around crypto, traditional finance has changed and it's all coming together into one and we thought it would be great to launch this show and have it powered by WisdomTree. So, without further ado, we'd like to bring on our guest. >> welcome to the tokenization tower, Will. >> Good afternoon, [laughter] guys. Great to be with you. >> Yes, great to have you here. >> Yeah, Will. Maybe just a quick intro about what you do at WisdomTree, your backstory, and why you're so passionate about this convergence that's happening right before eyes.

>> Yeah, absolutely. So, as I'm sure the screen says, I'm head of digital assets at WisdomTree. WisdomTree global asset manager, ETF sponsor, manage, you know, about 170 billion dollars in assets under management today. So, I've been at the firm now for like 12 years and then doing everything in crypto blockchain on-chain financial services for about the past 6 years. And so, you know, WisdomTree thinks of ourselves as an innovator and on-chain financial services is kind of very clearly like the next wave of innovation happening in financial services. And so, um very excited to be a a big part of it, we think.

>> I mean, you've been building in this space for a number of years. So, do you actually think that convergence is happening today and it's warranted? >> Yeah, definitely. I mean, more so now than ever before. Like, I remember going to some of these events, you know, 6 years ago, and there's like kind of the same cohort of people who were there at the time, and it's just like one of those things. Like, you're kind of like talking into a wall, it feels like. And it actually um So, a lot of the people that I've worked with at WisdomTree have been in like the ETF space for a long time. And it's interesting talking to them about it, where they used to feel like they used to be going around 20 years ago and talking to people about this thing called ETFs, and why they're better than

mutual funds, and how this is going to be the future of asset management. And again, it felt like you were banging your head against the wall. And so, um that never really scared me that there'd be stuff where you're, you know, kind of pitching stuff, talking, and um things kind of happen over time. And so, [clears throat] um it does feel like there's a lot more happening now. We could talk about regulatory, distribution, other reasons why, uh but it it does feel like a good moment to kind of be in the space and have been in it for a while. >> You know, Will, I totally agree, right? It's been just a total, you know, growth phase, right? Since Genesis Act, we've seen the rise of tokenized assets on chain explode.

Clarity's, you know, very Clarity's >> Clarity's kind of here. We'll see. >> Clarity may come. We'll see what happens. But, clearly this trend is just snowballing, and we're calling it the convergence, which I think is very accurate. And so, I just want to know what this term means to you, and what this kind of, you know, series means to the WisdomTree team. >> Yeah, I mean, I think convergence, like, it maybe it's not going to feel like so much of like separate systems or some things that are kind of on the side, and actually adding value for um you know, lots of use cases in financial services using this new infrastructure. Maybe talk about the infrastructure even a bit less in this, and more about the outcomes that you're getting. Where people aren't thinking, "Oh, I'm using a stablecoin for this cuz like XYZ reasons." But, it's just like the thing

that you're using, kind of just like you wouldn't think about RTP, or whatever it is, right? Um so, maybe think kind of for some of it, but I I I think certainly like I don't know every major firm on Wall Street has like big digital assets teams, on-chain financial services teams, whatever you want to call it, focused on this. So, very clearly like it's not TradFi and DeFi, but it's just kind of like financial services and there's different methods for delivering it, right? >> Mhm. I know that WisdomTree has been in this space for over half a decade, half a decade or so. Um in comparison, some teams and big financial firms have been coming in over the past like 12 to 18 months, right? So, what was kind of the impetus back then if you could think to the early days for WisdomTree on getting

into digital assets and like how has it ultimately evolved? Was it in line with what you imagined? >> Yeah, I mean I I think um broadly yes. I mean there's definitely been some kind of changes there. I mean the impetus for us getting involved was just that, like I said at the outset, like we're a um think of ourselves as a disruptor. Um we're kind of important and you know, we're still founder-led, like our CEO was kind of important in how ETFs ultimately became the thing that they became. And um you know, so I was fortunate to work for him and you know, him asking the questions of like, "Hey, what's going to do to ETFs what ETFs did to mutual funds?" Or like what's going to be like this next wave of innovation in asset management, financial services broadly, and not being scared to say

that, you know, it's something related to crypto, which like back in 2018 was like not so obvious or common, right? >> Definitely. >> Um not saying, "Oh, it needs to be some big private blockchain that's like staffed by a bunch of like bank consortium members, right?" Uh saying like, "No, we can do this on like public infrastructure. That's where like the benefits come." Things like that, not being afraid of like that innovation and like not being afraid to say like, "Yeah, this could be disruptive for like our current business today and other businesses," but kind of being willing to walk into that. I I think that led to us kind of seeing it early and um being a part of it early.

>> Right place, right time. We had the Robinhood CEO um on CNBC just a couple days ago answering questions almost squirmishly with regards to why this tokenized stock craze has kind of started on Robinhood chain. >> [snorts] >> But the one specific thing that stood out from him was his answer about distribution about the US equities market specifically being one of the greatest {quote} exports of this country. Right, if you look at for example the Chinese equities market, it is much more flatlined over the last 30 years than the US equities market. And this goes for a lot of other countries in terms of total size and scale of returns. Now, his answer was look, there are so many people who have a very

hard time getting access to these equities. In In fact, it's impossible to get access to these equities outside of people in the US or if you have like an Interactive Brokers account because you're high net worth. And so his answer was all around the distribution of basically kind of emanating equities and US products globally. And so from your perspective, I think you're probably thinking about the distribution of WisdomTree's products non-stop as well as just like where this is all going. So I guess very broad, where is this all going? Like where is this distribution question going?

>> Yeah, no, it's great. I I don't actually agree with everything that Vlad says, but I very much agree with that. Like I think you know, there was this report JP Morgan put out like I think it was a month or two ago about like how dominant US capital markets have become. Like it's truly what allows us to have so much influence a piece in addition to like a giant navy, right? That allows us to have so much influence around the world. And I think it's like you know, people like to you know, badmouth financial services in some case, but like it is so competitive and like the scale of it has gotten to be like so massive and like so many people are participating in it now.

Clearly like the world wants to be involved in it, right? We also have some of like the best oversight and like kind of rules and regulations around like how US capital markets work. And so I think some of what tokenization on-chain financial services can allow is like exporting this, not just like the securities, but like the way we do things around the world, right? Giving more and more people access to it and for things that allow them to meet their financial goals, right? Where like the rest of the world can kind of get some of the benefits of like the competition, um like the ruthless competition we see from financial services firms in the United States. So, um you know, for us all this stuff, right? Tokenization on-chain is about distribution and user experience. Like we don't view this in

any sense as like, oh, we're trying to like save a few basis points on costs. It's not it, right? Like that's kind of like the wrong way to think about it. For us, this is about like who can we provide access to or how can we serve people who want to be served in a different way, right? Where it's not like everyone wants to log into like for all types of times they need an asset management product, log into their brokerage account and like place a trade there and wait T+1 for it to settle, right? Like there's lots of use cases where they want to do a different type of transaction, want it to settle faster, want to pledge as collateral on stuff that they might need or they they don't have access to a US brokerage account where, you know, on-chain securities can serve that need. So, um

that's how we try to think about it and um I think it's the right way to kind of approach this uh you know, opportunity. >> I agree with you on that on the front of distribution, too, and I think it differs depending on who you're serving. And a lot of the conversation uh that I know me and Andy have been having is around institutional adoption. But not for nothing, there is the retail audience and they're huge and they're important as well, right? So, how do you think about distribution when it comes to, okay, we're serving an institutional audience versus retail? Cuz they are not the same. >> Yeah, for sure. But what One thing that's interesting about ETFs is I love, you know, that was here for all of it, but like these ETF kind of histories is that when ETFs first kind of came about,

it was like, well, is this like an institutional product or is it like a retail product? I don't really know how to place it. And the answer was it's an everyone product, right? Like [clears throat] it was the best possible product, it worked well for institutions and for retail, right? Like some of the first users of this would have been like people in like the Midwest who aren't financial service professionals but had like an E*TRADE account and they're like, "Wait, this is like a better type of way for me to invest in like this broad basket of stocks, right?" So, um that's the not to say that this is like perfect. Like there's certainly going to be institutional things and retail things, right? But like our attitude tries to be like we want to build the best possible product and make it as applicable for the widest um audience of

people whether they're the largest institution in the world or just like a retail investor. Um so, again, not always perfect, doesn't always exactly work out that way, but um I I think like you're doing like we believe like retail is like a core part of this. Like all of this stuff in tokenization is not going to be like, "Oh, can I do like one better collateral management product for like, you know, some big uh financial service market participant." It's about um also serving retail as well. >> Yeah. >> And so, Will, I mean I'm curious what the obstacles are because you know, I got wind from some confidential sources that there's a imminent tokenization innovation exemption coming in replacement of the Clarity Act. Now, that is the polarizing

part for people that I got quite a bit of yelled at for on on the timeline, but but the reality is Clarity may be unlikely, but this tokenization exemption seems extremely likely and very soon. And I don't know the exact details, but it feels like there's this kind of like the gates and the water is like like the dam's kind of tipping over and it's kind of dripping over, but we're we're on the precipice of kind of like the floodgates opening, right? What is stopping us from your perspective? What are the obstacles that you're still looking to overcome here? Is it regulatory? Is it education? What is that?

>> Yeah, I mean the obstacles as I think about them relates to what you're talking about, you know, really liquidity and onboarding, right? And like to facilitate kind of the strong liquidity in tokenized products and to facilitate kind of easy onboarding to them while still maintaining the permission nature or at least like compliant with US like AML and securities rules. >> Sure. >> Um that requires like both product development, commercial coordination, and like regulatory stuff to happen. So like um you know, I don't view the innovation exemption as like a replacement for the genius act. It's more of just like this is like the tool like this is what the SEC does, right?

Like the SEC has all the tools in the toolkit to regulate and rule make securities markets. It's like in a technology neutral way, right? It doesn't matter whether you're recording these securities on a blockchain or you're recording it in like some paper, you know, database like they used to do, right? It's like technology neutral regulation. And it's a security. And so like the SEC has the ability to do rule making around that. That takes lots of different forms, right? But I I think the things like innovation exemption, also you had mentioned this, but like potential changes to reg NMS, right? Like those are the types of things that like you need to see in order for tokenized securities to develop like liquid markets around them, especially onshore, like within the US regulatory perimeter. So um that's just like that's happening. Like the the train has left

the station uh on that. And so um I think like there's going to be continued stuff there. And then there also needs to just be like distribution, commercial coordination, like meeting people where they are. That's also happening, right? Like post genius act, I mean it's been like a day and night from where things used to be with people saying like yeah, I'm comfortable with like getting wallets, right? And like new wallet management and like providing this as an option to like users that I already have today. Um and so um I think with that it's just like going to be some time and just like continued effort bringing that forward.

But I really do think um you know, things are moving. >> Yeah. I mean even last month we saw that the DTCC announced that about 40 firms were doing pilots including like JP Morgan, Goldman Sachs, Invesco, Citadel uh simulating essentially normal trading using tokenized equities. Uh and the trial kind of tested a number of trading activities and we'll kind of see where that goes. But what does that kind of indicate to you about the expansion on the horizon right now when we're having such big firms like that do these tests? >> Totally. I mean, I think you know, DTCC got that kind of milestone no action letter. And you know, for your audience, for you know, whoever's listening, there's they're unique firm and like they're a market utility in some ways, right? Member owned firm where they're owned by kind of largest kind of

participants in the network. Um and so um but the fact that and it's actually interesting, you know, WisdomTree used to be a an investor in a business that they bought, so currency, which kind of has formed the basis for like the DTCC digital assets technology that they're doing. >> Mhm. >> And so um I think it's great that they're doing that. I think that's one model certainly by which people are bringing assets on chain. And um I think it just kind of continues to go that this is evolving beyond like the experimentation phase and like people are getting into it depending on the firm and the model and like their energy and ability and kind of varying degrees of like deepness at this point if that makes sense.

>> Yeah, and then Will, on that note, from what I understand, the way the DTC started was they kind of started to take stock certificates and put them on electronic machines. And there was just kind of this group of companies that started to do it. And then all of a sudden they became like the committee, right? It was almost like right place, right time. And maybe I'm like missing something. >> No, no. I mean, that's that is a story that it used to be like, you know, paper settlement right? >> Right. >> You had like essentially safe deposit boxes and you were like moving share certificates amongst different people after the trades had settled, right? So like people would make the trades on the New York Stock Exchange. And then to like do the settlement associated with them, you had people running around >> Yeah.

>> these paper certificates. And eventually you get these huge backlogs where they'd like need to shut the market down for like days because they were catching up on getting all of these security certificates to the right place. And so the DTCC's history was that was kind of provided as like a solution to this where they said, "Instead of like running these around everywhere, we're going to have like one central location and we're going to keep track of like, well, person A owns this, person B owns this, or broker A, broker B." And that's kind of like you can see the basis for like DTC, central securities depositories generally. Um >> And so now >> Well, now >> I'm thinking and like kind of like what I'm getting to here is is like is is there a on-chain version of this happening as we speak, right? Like is there is

Alpaca and the issuers and other players like yourselves kind of forming this new world, this new on-chain finance community? Like how's that happening? >> think it gets to like these different models of tokenization that people talk about, right? And like [clears throat] the SEC, as we're us kind of singing their praises on lots of stuff, put out this very clarifying framework which kind of aligned with how a lot of people were thinking about it uh earlier this year which talked about like there's issuer-sponsored tokenization uh or issuer-led tokenization, there's like third-party tokenization, right? And then you've got different models within that. So like issuer-led tokenization would be like WisdomTree saying, "Hey, I'm issuing a fund, our money market fund right?"

>> Yep. >> And I'm saying that like we are tokenizing, keeping track of the share records this way as tokens on blockchains, and like we are the issuer of that, that's what we are doing, right? Issuer-sponsored tokenization. You know, our friends at Superstate do this with like Opening Bell, right? Where they're saying like, "Hey, we're going to like us a um a an a corporate's coming to us and saying like, 'Hey, I want to issue my shares on chain.' Like Superstate will help them do that. Right. So that's issuer-sponsored tokenization. Then there's this third-party tokenization which is like the best right? Uh well, there's a couple different models there. Like one is just like security entitlements, which is what DTC does where they say, "Hey, there's like a security entitlement you have and we issue a token against that."

But like and that's really how like the US equity market works in lots of ways today, right? So like you log into your Robinhood account, not buying the token, but just like buying like a a share of Tesla there, right? Really what like there's a Robinhood as a clearing member has like a bunch of shares of Tesla. They keep track of the records and they know, "Hey, Andy's got five, Jacky's got two." Right? And that's how that works, right? So, what you have is a security entitlement that's issued by Robinhood through DTC. Um so, there's a security entitlement model which lines up with how DTC is doing it. And then there are these kind of wrapper synthetic models that people talk about where you know, Matt Levine's money stuff this week. I think didn't totally explain it clearly, but like got on like the general trend of it.

>> Yep. >> Um where it can either be like, "Well, I've got like kind of an SPV that either is holding the shares or really giving a claim against the shares, right?" Which kind of looks like a securities based swap saying that um "Hey, you know, I'm telling you that this is like um you know, I don't want to pick out any letter cuz all those letters you know, token A and um I tell you token A is worth the price of Tesla, right? But like are you on Tesla's share like who's the shareholder of record or what's the claim >> on it? >> That's what Vlad was answering on CNBC and I don't >> And AMC is the token in question on that front yeah.

>> And so, I don't think we need to get too deep into all the models here for the sake of today, but I think what's happening is is what you're illustrating as we're going through the initial iteration of figuring out what's the best way, what's the most compliant way, what's the way that's going to be the easiest and most efficient. And so, it just feels like we're on the frontier here. >> Oh, totally. And I I think we're going to see a lot of shakeout of these different models, right? And it's really like I think people everyone's trying to innovate in the right way and try to get the best possible combination of like user experience and like regulatory status, right? And functionality.

>> Yeah. >> And um but that's you can clearly see by these different models that are developing that they don't all like people are doing different things. >> Yeah. >> Um which um and we'll see how it kind of develops and I think the most important thing is hopefully like everything's done responsibly and like we don't have like any bad outcomes that happen. Like you kind of saw with like um you know some of the pre-IPO companies where people are like, "Oh, I have this SPV that holds shares of Anthropic." And then they're finding out after the fact that oh they never owned those shares or their shares were done by like some sort of faulty transfer not in compliance with Anthropic's rules. So like those are bad things that happen and like I think um it'd be good for the industry not to do

that uh in this situation. >> So if we could ask you more directly then, what do you think is the answer? Is it issuer-led, is it wrapped, or is it kind of for the market to decide and then we all just watch and see? >> So we're we're focused on issuer-led, right? Like we're focused on doing issuer-led tokenization within the US regulatory perimeter. Um we're a you know fund manager or issuing funds, not necessarily single securities, right? Uh but um that um single stocks I should say. Yeah. But as as a fund manager like this lines up very well and you know what our challenge like what the team and I deal with every day is how do you do this kind of within the US regulatory perimeter and then get the best possible functionality and user experience out of it, right? So that's the real challenge

and that's where we when we win business we think it's on a combination of we know it's on a combination of doing things within kind of the US regulatory perimeter and uh also adding really good functionality around it. Uh so like the example that um you know we talk about is like we got a exemptive relief from the SEC to allow our tokenized money market fund to trade 24/7 via broker-dealer. >> Wow. >> Which um is like actually allows you to like swap it for a stable coin at like 2:00 a.m. on a Sunday and like go make your payment, right? Makes it more composable and workable within like DeFi. Uh really on-chain workflows. And that was a process by which we you work with the SEC and went and made filings and stuff like that. So that's what I say like combining functionality and

like the regulatory status, that's kind of what I mean. So yeah that's what we see as being a big challenge because we view like going back to the start like US capital markets. Like if you want to get big, you got to do stuff within the US capital markets and be able to do things on shore. >> I think also I want to point out that WisdomTree went from about 30 million to 770 770 million to over a billion dollars in AUM. That is quite the journey up and I would imagine it's probably going to keep going, right? So >> That's the plan, yeah. >> That's the hope, [laughter] right? But what do you think has really driven the maybe hockey stick growth there? Was it Treasuries, money market funds, or something else that's driving like mainly institutional capital, right?

>> Yeah, yeah, it is mainly institutional today, but like we've built this all in a way that can be retail accessible, right? So I mean, for kind of tokenized real world assets generally, changing a bit with the some of the tokenized stocks, but it's really been money market funds and Treasuries, right? Which is just like a complement to stable coins. So people were looking like stable coins became a very big thing over time, right? Stable coins especially post Genius Act, at least it was challenging to get yield on them at least without relying on DeFi or kind of kind of various things. And so money market funds as a yield bearing kind of stable value complement to stable coins and also a reserve asset for stable coins was the biggest thing. So the use cases that we're serving are really, you know, stable coin issuers. You know, our

money market fund is used by them. Treasury management, so businesses who are using stable coins for payments, wanting to hold a kind of yield bearing government money market fund alongside of it. And then collateral management. So just having a better collateral instrument that's yield bearing allows hedge funds, you know, kind of part of securities lending, other transactions to um you know, get them that good experience. So that's really what's driven the growth to date has been those. And then increasingly I expect especially in the near future it'll be increasingly retail as well. >> Yeah.

What do you expect to be the driver for the next era? Well, really it's just what is going to evolve and explode in 2027 that you guys maybe don't have yet or are planning to have? I I you may, know, you probably can't talk too much about plans here, but where do you see areas of growth specifically and how are you thinking about WisdomTree positioning for that growth? >> Yeah, I mean, in the future we see anything that can be held in like a traditional ETF can be held in like an on-chain version as well. And the benefits of having an on-chain is like that true 24/7 continuous trading and settlement model for it. And so I think one of the challenges that people are kind of coming to today is how do we actually have like a good trading experience around that? Like if I can

buy like an S&P 500 ETF in my brokerage account for like penny wide spreads, right? Like it's it's an amazing investing experience. There isn't like, you know, there's no need right now to like totally replicate that for like the on-chain universe, but like you want them to have a good trading experience where they're not going to be trading at like 100 bips wide on the spread, right? And so um that requires kind of a good kind of market structure around it and also capital and like like liquidity provision into that in an efficient way. And so um I mean, one of the biggest things that we're going to need to see in like I think that's going to be the case over the next, you know, 12-18 months like you said, is the development of markets allowing for that within the US regulatory perimeter. So that's what

we are very very focused on. Um you know, we've got this filing in with the SEC for a tokenized ETF, which would kind of provide the framework by which there could be a fund vehicle that could do this. Yep. Um and um you know, there's some other innovation stuff happening for there. That's for sure one. And then the second piece is like I just think the onboarding experience needs to kind of grow up a bit and like improve broadly in the space where like you want retail investors being able to onboard once and then get access to a lot of stuff. Potentially in the future whether reliance models, like there's a lot of innovation stuff you can do, especially with this technology where like there's so much that's transparent on-chain.

Um that you can get real good judgments on like knowing if somebody's like touching mixers or like affiliated with a terrorist group in like in that example, right? And so um I think there's a lot that can happen there, and um I think that's just going to make it easier for people to come on board, right? And um that that's going to be to be really important as well. >> I think also a question I have for you is as more assets move on chain, how do you think about diversification beyond treasuries and stablecoins? And then when you think about SEC registered funds, too, like what is kind of the opportunity there?

>> Yeah, I mean I think it's um like I said, anything that can be an ETF. I think it's going to start with kind of like the major market benchmarks. Uh so, you can think like US large cap stocks, right? Like uh US 500, for example. Uh it could be uh similar things internationally, but what people are going to want to do, especially in an environment where these are trading 24/7, like you want good pricing around them 24/7, and like single stocks do not always have good pricing like on like you have to have really wide spreads like overnight or over the weekend necessarily, right? Where there is kind of a price for like the S&P 500 like around the clock. And so, um I Our kind of house view is that like focusing on like the major indexes, these major categories of beta, what we call them in

ETFs, is um going to be like the first wave of innovation. And notably, I've just been talking about like liquid instruments. Um like we're relatively less, you know, bearish might be a strong term, but like less focused on like doing private markets through tokenized forms. Like I I think >> the challenge is really around taking this technology, this like database that constantly updates, right? That operates 24/7, and seeing how you can fit like liquid instruments to like best take advantage of that. More so than like private assets that like maybe trade or settle like on a 30-day basis, whatever it might be, right? Like the challenge like the ex- the issue with the experience for those is not because of

the record-keeping layer, in my opinion. >> Right. Yeah, I you know, I think of it as like a barbell of speculation versus non-speculation. You've got like non-speculative assets, which is treasuries and stablecoins. They're exploding, and then equities on the other cut on the other side pretty much, you know, exploding. But then you've got these like illiquid private credit VC firms or like, you know, a VC book um even real estate. These things are marked to market, you know, quarterly, you know, bi-annually, right? They also have a illiquidity premium, right? And so you're kind of taking the genie out of the bottle a little bit with private credit as an example by marking it to market every single Ethereum block.

>> Yeah. >> You know, there's kind of a bit of like uh there's going to be quite a bit of pushback. But then there's also going to be, you know, additional benefits, but I think generally I agree. And I'm I mean, if you wanted to add anything there, I've got a kind of a broader question about what's going to happen here, but just any thoughts there? >> No, no. I I think you're right. I think they're um like like tokenizing it does not magically bring it liquidity or price. >> Right. >> And so if something is not getting traded or the spreads are really wide on it, like um you know, it's just the benefits of having it like kind of continuously up uh on chain um might not necessarily might like there could be sources of capital that are cheaper on chain and etc. for borrowing against it.

So I don't want to be like overly dismissive, but um I I think um I think there are other things with private markets that can get better and solve first before like putting it on chain kind of makes it magically more liquid. >> Yeah. I'd love to hear more about what you guys are doing specifically, but this has just, you know, brought me to this question that I've asked quite a few guests, which is if this tokenization thesis is correct and trillions of dollars of assets come on chain in the next, you know, 12, 18, 36 months, who wins? What companies are, you know, from the investor, you know, put your investor hat on, who wins? How do you allocate capital into this kind of trend? Who loses? Who Who do you Who do you short? Who are you longing? Who are you shorting? Maybe not actually like

investing, but just kind of walk us through the hypotheticals here. >> Yeah, I mean, I think you're going to see people who try and make their products like most usable to investors embracing it in that environment who would like presumably taken a higher share, right? So like that's what WisdomTree is trying to do, right? So like whatever our market share is of ETFs, we want it to be much greater than the kind of like the tokenized equivalents. Um so, I I think there's going to be one person that you could see win. I I think there are certain intermediaries that are part of like financial services transactions today. I mean, everyone says this who like potentially could be like not winners in this and losers, right? When you've got a database that's kind of constantly updating, right?

Like, a public blockchain. Um and that just functions differently where there's like less kind of friction in the system necessarily where uh there could be um losers that way as well. I mean, big big picture like this should open like closed ecosystems should like be under pressure with [clears throat] this, right? Where it's just like you've got these open standards. Like, it should be kind of like a no walled gardens sort of world going forward. And uh so, that's what we try to keep in mind when we're building stuff is like how does this work with like no walled gardens? And um so, um anyone who's trying to like hang on to customers or like squeezing revenue out of their customers that way uh should hopefully be a loser. And hopefully this should give people more choice and uh a greater ability to pipe in financial services from different

places into like the same UX in some ways, right? Is maybe one way to think about it. Uh so, you're not just like signing up with your bank when you're 18 years old going off to college. And then next thing you know, you're getting every single financial services product in your life from that same bank cuz it's like they've trapped you. Um we don't want that to happen. So, like um >> The end user is the winner. >> Yes, I hope so. Um yeah, that that should be the way that it goes. >> Yeah. Do you kind of see as we're in this like quasi bull market Andy would probably say full market, right? But um that the market for opportunity is better than it ever has been before because even when we were in a bear market, you know, WisdomTree's AUM was going up. And so, I've heard from a

number of people too is that like the institutional investors weren't really focused on price. They were still building in the back end, piloting, testing things out. So, if we put all these pieces together like stablecoins, tokenized funds, 24/7 trading, which we didn't really fully get into in this episode, but I know that's something that you're well-versed on as well. Is it kind of creating a perfect storm for more mainstream adoption? >> Yeah, definitely. I mean, I think like some of the big things that I I find really interesting recently have been like these announcements from like the large US broker-dealers, right? Around like incorporating wallets into their platform, which is like a big infrastructure lift for them, right? So, like that's like a multi-year infrastructure product uh process for them to be able to do that. And you've seen some of like um you know, crypto

firms, crypto infrastructure firms building products to be able to like give them that wallet and trading management that they need. So, like that's a huge unlock for the space making it way more convenient for like a lot of people to come and say like, "Oh, I can like Oh, this is settled like instantly. Oh, I can move a stable coin around instantly." Like that, right? So, um yeah, I think that's a big unlock and you know, I think and maybe we'll see it getting like this isn't like totally like separated from like the existing crypto market, which still very, very much drives a lot of demand and flows into like the token. Like that's who we are serving today, but like I I think hopefully we get out of like, "Oh, bull market on like prices prices go up prices go down." And you're just seeing

kind of like continued build and like adoption of products. >> Yes. >> Yes, you have seen that in some ways with like stable coins like balance outstanding being like relatively consistent. Now, I'd like it to be growing more faster than it is. >> Same. Let's get it going again. >> And so, >> [laughter] >> um like if that >> been sideways. >> Well, that's true. And like if that doesn't grow, then that's kind of reflective of like, you know, if we look back in five years and like it's still $300 billion. >> Yeah, we got a problem. >> a real problem. Um but like all the activity that we're seeing is very indicative of like stable coins developing and developing beyond the way they were used in the past, which is going to be um a requirement for all this stuff to really take off.

>> Do you think stable coins and tokenized funds would end up as competing products or more complimentary to one each other? >> They're a complement. I mean, I'm sure in some ways there's like you there are going to be people who are saying I can stay in a stable coin or I can swap into a tokenized money market fund for my balance at rest and they're going to choose to swap into tokenized money market fund in lots of use cases, right? That's what we tried to do with like the regulatory relief that we got. Um but that said, like they're much more complementary. That's like our addressable market and like that's going to help pull people in and keep them on stables if they can like do more with stables once they've got it. So, I I don't view it I think it's kind of a

narrow view to view them as like competing. Like it's much more about growing the ecosystem and growing the pie. Um that's um my take on it. >> Yeah. And what's your North Star as we kind of come to a a close here for WisdomTree? When you're thinking about all your tokenized products, this, you know, convergence as a whole, what are your metrics here that you're really looking to grow? What is your, you know, what is the North Star for 2030? You look back, what is the WisdomTree brand? What is the What does that look like? >> Yeah, I mean, we try and do right by the investor, right? And we're asset manager, um kind of like all asset managers judged by how we're growing AUM, serving more people. So, the things that I look at every day are like how's our AUM growing and like are we seeing

product market fit and adoption by people, by users? And like some of that's quantitative and some of it's just like anecdotal when you're like in the building phase of like learning like, "Oh, this is like a use case I hadn't thought of before where like somebody's like really found that this like solved a problem for them, right?" Um so that's what um we focus on. Uh and so yeah, long-term like we want to uh be doing right by investors, helping them have a really good investing experience >> Yep. >> broadly defined. So, some of that's like definitely after-tax returns, but it's also like was this a good, convenient, secure experience for you? And that's like with ETFs like they've won on that basis, right? Where um it's just a better investing experience than what people used to be able to get.

>> Amazing. Well, Will, thank you so much for sitting down with us today and >> My pleasure. Thanks for having me. >> This has been Convergence episode number one. Um it's a wrap. [laughter] >> Thank you. >> [music]