* Key insight: SEC and FINRA granted the necessary approvals for WisdomTree to launch 24/7 trading and settlement for its tokenized money market fund.
* Expert quote: “The fact that regulators are now willing to allow it shows how far the idea has come.” — Javelin Strategy’s James Wester
* Forward look: Other investment firms and markets are moving towards tokenized 24/7 trading options.
WisdomTree has launched 24/7 trading and settlement for its tokenized money market funds after being granted regulatory approval from multiple agencies.
The global exchange-traded fund broker and investment platform announced on Tuesday that its tokenized MMF, known as WisdomTree Treasury Money Market Digital Fund, now has 24/7 trading and instant settlement capabilities through Circle’s USDC stablecoin.
The announcement came a day after the Securities and Exchange Commission approved an exemptive relief to WisdomTree so the broker could execute same-day transaction settlements.
WisdomTree Securities, a broker-dealer subsidiary of WisdomTree, separately received approval from the Financial Industry Regulatory Authority to expand its broker-dealer activities to include principal trading of registered fund shares, according to the company. FINRA approval enables 24/7 liquidity for WisdomTree’s tokenized MMF shares, with settlement facilitated by stablecoins.
“As we see it, this is the first example of a fund trading and settling on a ‘T instant’ basis, which is an innovative step forward in terms of how securities and fund markets work,” Will Peck, head of digital assets for WisdomTree, told American Banker.
“T instant,” or T+0, refers to a transaction with real-time or same-day settlement. The standard transaction date for stocks and most bonds in the U.S. is T+1, which means trades settle one business day after the initial transaction.
In the SEC filing granting the exemption on Monday, the agency stated that it “is appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the act,” referring to the Investment Company Act of 1940, which regulates investment funds.
“Participation by the covered funds in the proposed transactions is consistent with the provisions, policies and purposes of the act and is on a basis no less advantageous than that of other participants,” the filing continued.
Tokenized MMFs are a form of tokenized real world assets (RWAs), where a unique digital representation of an asset is stored on a distributed ledger as a “token.”
“The blockchain will enable this future state where we can have 24/7, always-on, immutable recordkeeping,” BNY Chief Product and Innovation Officer Carolyn Weinberg said at American Banker’s Most Powerful Women in Banking conference last October. BNY provides banking-as-a-service infrastructure to WisdomTree for its retail digital assets platform through a partnership announced last fall.
Like most retail MMFs, WisdomTree’s tokenized MMF is designed to maintain a stable net asset value (NAV) of $1.00 per share and will trade at that price, according to the company.
Peck told American Banker that both the USDC stablecoin and WisdomTree’s tokenized MMF are on the Ethereum ledger, which provides the digital infrastructure needed for real-time settlement.
“Both of these [types of] assets are represented as tokens on Ethereum, though they’re different structures,” he said. “One’s a stablecoin, one’s a fund interest, but with that unified record we’re able to do faster and more convenient transactions than with traditional systems.”
James Wester, research director for cryptocurrency for the financial services advisory firm Javelin Strategy and Research, told American Banker that the SEC’s exemption for WisdomTree opens the door for future 24/7 trading opportunities.
“Markets don’t actually need to close; they just always have,” Wester said. “We’re finally seeing the round-the-clock trading that crypto has demonstrated for more than a decade.”
Wester noted that a regulated fund, such as WisdomTree’s tokenized MMF, moving to continuous trading could change how investors approach accessing liquidity and moving into cash-like assets.
“The fact that regulators are now willing to allow it shows how far the idea has come,” he said.
Other firms and markets are moving towards tokenized 24/7 trading options as well. BlackRock announced its plans for tokenized exchange-traded funds (ETFs) in September to facilitate 24/7 trading, and the New York Stock Exchange is developing a 24/7 platform for tokenized stocks and ETFs.
