Rafi Aviav, Head of Product Development, Capital Markets and Technology, WisdomTree, added: “Cryptocurrencies are potentially the next asset class to benefit from increased interest when they become accessible in an ETP structure. We have developed a solution which addresses the difficulties investors face in accessing digital assets and are bridging the gap between the underlying decentralised online blockchain technology and traditional investment structures. The ETP wrapper will add new dimensions to the cryptocurrency universe including institutional class custody solutions for investors, easier trading incorporated into standard brokerage and account maintenance procedures, more liquid and transparent trading and a broader array of more sophisticated market participants entering the arena for these products.”
Similar to physical gold ETPs, investors in the WisdomTree Bitcoin ETP will have an entitlement to an amount of Bitcoin. Investors will be able to view each share’s coin entitlement and the total amount of Bitcoins secured in custody, corresponding to the total coin entitlement, on WisdomTree’s website. To ensure the highest level of security, WisdomTree employ institutional-grade digital currency custodians who maintain highly secure cold storage facilities. These specialised custodians employ elaborate physical and digital security procedures and cutting-edge technology to safely generate keys, encrypt data and create and verify digital signatures required for transacting in and safekeeping of cryptocurrencies. This approach addresses one of the key barriers currently limiting cryptocurrency adoption by investors.
While WisdomTree is targeting professional investors only at this stage, it is their belief that, in the near future, a cryptocurrency ETP may receive regulatory approval for use by the wider investor community and so address another key barrier, that being regulatory.
Jonathan Steinberg, CEO, WisdomTree, concluded: “WisdomTree has always been at the forefront of innovation and we see blockchain technology and digital currencies as being transformative for the asset management industry. Much like how the ETP structure has outshone the mutual fund structure in significant ways, blockchain and cryptocurrencies have the potential to change how investors participate in financial markets, globally.”
