Investments is the latest fund manager trying to get in on the crypto boom through the advisory world–amid scant signs that the Securities and Exchange Commission will approve a Bitcoin exchange-traded fund.
“Crypto exchange-traded products in the United States may not be the wrapper with which the customer truly accesses crypto,” said
(ticker: WETF) CEO Jonathan Steinberg in an interview with Barron’s. While such products are on the rise in Europe, in the U.S. “we don’t see that anywhere near on the horizon,” he said.
WisdomTree manages about $79 billion, almost entirely in ETFs. It’s filed an application with the SEC for a spot-based Bitcoin ETF, with a decision expected by May 15.
But the SEC has consistently rejected such ETFs, signaling that while it’s comfortable with Bitcoin futures products, it isn’t ready to sign off on an ETF owning Bitcoin directly.
That’s prompting WisdomTree to try other channels. One path will be establishing separately managed accounts that hold crypto and can be accessed by financial advisers, Steinberg said. WisdomTree is already piloting the accounts, which hold seven different cryptocurrencies, with some financial advisers.
Will Peck, WisdomTree’s head of digital assets, said in an interview that the firm will likely have an announcement about expanding access later this year. The idea is to bring crypto to advisers who logistically would find it impossible to open separate accounts for each individual client on crypto exchanges.
WisdomTree is betting its separately managed accounts will be a more attractive option for advisors than investments like the
Grayscale Bitcoin Trust
(GBTC). That product trades like a closed-end fund over the counter, but its fees are steep and it’s often deviated widely from the price of Bitcoin.
WisdomTree isn’t the only fund shop trying to build a crypto asset base.
Last week, Fidelity unveiled a plan to get Bitcoin into 401(k) accounts. The Boston-based firm said it would create a “digital assets account” that employers can put in their 401(k) plans. Fidelity plans to charge an undisclosed transaction fee as well as between 0.75% and 0.90% in annual fees for administration, custody and accounting.
Labor Department officials have said they have serious concerns with the plan.
WisdomTree is also trying to reach mom-and-pop investors directly by creating a blockchain-based app that lets them buy crypto along with “tokenized” traditional assets like gold or Treasurys. The company expects to launch the app later this year.
The company is working with Ritholtz Wealth Management on an index-based product for a separately managed account platform.
The SEC’s roadblock to a Bitcoin ETF may not end soon. But it’s clear that asset managers are finding other ways to build their crypto business.
Write to Joe Light at [email protected]