WisdomTree Gets SEC Nod to Enable Instant Settlement for Tokenized Money Market Fund

In brief

• WisdomTree’s tokenized money market fund will soon trade 24/7.
• The shift will also allow investors to cash out WTGXX instantly.
• The arrangement required approvals from the SEC and FINRA.

WisdomTree said on Tuesday that it’s enabling instant settlement for its tokenized money market fund, indicating its product won’t be limited by Wall Street’s pace any longer. The shift is expected to reduce “cash drag” associated with settlement delays in traditional markets, while harnessing certain advantages that are innate to digital assets, the institution with $168 billion in assets under management said in a press release. The arrangement, which also enables round-the-clock trading for the WisdomTree Treasury Money Market Digital Fund (WTGXX), required exemptive relief from the SEC. 

On Tuesday, the regulator said it was okay for investors to trade WTGXX’s shares at $1 with a dealer on an intraday basis, regardless of WTGXX’s net asset value. That is typically determined every business day immediately after U.S. markets close. Although funds registered under the Investment Company Act of 1940 have historically functioned as investment vehicles, the SEC’s relief positions WisdomTree’s product as a form of digital cash that can be spent, moved, or traded instantly at any hour. WisdomTree described that functionality as “unprecedented,” while unlocking the efficiency and liquidity advantages native to digital representations of real-world assets. WisdomTree noted that its broker-dealer subsidiary gained FINRA approval to engage in principal trading for WTGXX. The company said that enables round-the-clock liquidity for shares in its tokenized money market fund, which can be exchanged for stablecoins.

At the same time, WisdomTree said its rollout “continues dividend accrual” for WTGXX, which involves using blockchain timestamps to track how long investors hold the token. That allows shareholders to earn yield even as WTGXX moves between wallets, WisdomTree said. WTGXX was valued at $730 million on Tuesday, according to RWA.xyz. It has been issued across nine networks, such as Ethereum and Solana, while offering an annualized percentage yield of 3.5%. Backed by U.S. Treasuries, its shares aim to trade at a value of $1 like a stablecoin. The development underscores how the SEC is becoming increasingly comfortable with mainstream financial products augmented by their blockchain-based format. In its relief order, the SEC said its green light was “appropriate in the public interest.” In July, SEC Chair Paul Atkins said the agency was committed to modernizing securities rules and regulations enabling financial markets to move on-chain through an initiative called “Project Crypto.” In the press release, WisdomTree Head of Digital Assets Will Peck indicated approvals from the SEC and FINRA are paving the way for that transition. “This is a true innovation and improvement in the investor experience, and it demonstrates how blockchain can serve as a new set of rails for capital markets,” he said.