WisdomTree aims to bring self-custody to regulated RWAs

WisdomTree has launched a tokenized real-world assets (RWA) platform designed to eventually let users access the asset manager’s regulated fund tokens from any type of wallet or blockchain network, according to a Sept. 18 announcement.

The platform, dubbed WisdomTree Connect, will initially custody users’ tokenized investment funds with third-party custodians while sending a “digital record” of ownership to the user’s personal wallet, WisdomTree said.

Eventually, WisdomTree aims to expand access to its RWAs “to other customer-facing platforms and apps… and retail users with self-hosted wallets,” it said. 

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RWAs — including tokenized claims on financial assets, commodities, or art — already command upwards of $12 billion in total value locked (TVL), according to RWA.xyz. 

They represent a $30-trillion market opportunity globally, Colin Butler, Polygon’s global head of institutional capital, told Cointelegraph in August.

The United States Securities and Exchange Commission (SEC) requires that tokenized investment funds generally be held by a qualified third-party custodian. This has impeded adoption among crypto-native users, who typically opt to “self-custody” tokens in user-managed wallets. 

“We envision a world where users can manage their own wallets independently of our wallet environment,” Roger Bayston, head of digital assets at asset managerFranklin Templeton, told Cointelegraph in August.

“We’re working closely with the SEC on this capability,” he added. 

WisdomTree operates more than a dozen tokenized investment funds, with holdings ranging from money market instruments, to S&P 500 stocks, to US treasury bonds of various durations. 

Among the most popular tokenized RWAs are those representing claims on off-chain money market funds, which pay law risk yield on US Dollars. 

The largest by assets under management (AUM) are BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and Franklin OnChain U.S. Government Money Fund (FOBXX), with AUM of approximately $520 million and $430 million, respectively.

WisdomTree’s tokenized money fund — Government Money Market Digital (WTGXX) — lags rivals, with less than $8 million in AUM as of Sept. 18. 

By integrating with more blockchain networks and expanding RWA access to user-managed wallets, WisdomTree Connect “solves a key problem for firms seeking integration between traditional and decentralized finance,” WisdomTree said.

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