crypto see yet another sell-off yesterday with hundreds of millions of long positions liquidated and in New York morning trade, we are seeing muted reaction to the latest jobs as well as US retail sales figures.
But it has been two months of brutal price action for bulls, but institutions aren't necessarily shying away.
Big bank leaders have been to Capitol Hill to call for more crypto.
Clarity and legislation and firms continue to launch crypto trading products.
The tokenization market accelerated as expected this year, hitting around $30 billion and firms are definitely getting in on this action.
They're launching tokenized money market funds to enhance liquidity, speed settlements, and enable collateral use and def.
And right on Q JPMorgan Asset Management launched its first money market.
Fund yesterday on Ethereum.
Well joining me live here at the New York Stock Exchange this morning is Jason Guthrie, head of product of digital assets for Wisdom Tree.
Thank you so much for joining me here today.
Thank you very much for having me on.
Well, 2025 has been quite the year when it comes to digital assets, but first and foremost, can you break down tokenized money market funds for our viewing audience?
Yeah, absolutely.
So Uh, really tokenized money market funds are, uh, a great innovation that allows the blockchain native kind of finance industry to access the risk-free yield.
Um, I think there's been really good take-up over like the last few years following, you know, some of the bankruptcies that we saw in kind of the last bear market cycle, particularly around FTX Celsius that were real yield generation products and I think their adoption represents a recognition that there's no free lunch in finance.
That if you're getting extra return you're taking on extra risk somewhere and hence we're starting to see update by more, some more of the sophisticated players.
The tokenized money market funds themselves really are just regular money market funds.
Wisdom Tree has taken uh the approach of using the 40A structure, the exact same structure that we use for ETFs, uh, to bring, you know, this exposure on chain and then really focusing on the technology itself as a wrapper to add kind of utility and meet these clients where they are.
And when we take a step back and look at this year, we've been seeing plenty of volatility, not just in digital assets but other asset classes as well.
So why bring institutional only strategies on chain now?
Uh, so I think from our approach we don't look at it as institutional versus retail, we want to bring structures that are available to everybody.
I think one of the big benefits of tokenization, the blockchain is an infrastructure really is sort of the next round of democracy. of finance allowing everyone to access kind of best in class exposures through the vehicles.
We've definitely seen other players in the market focus on kind of institutional products.
I think this is really about a uh like speed to market or an ease of of kind of route to market.
If you have an institutional product that's domiciled offshore requiring kind of qualified investor sort of benchmarks in order to get into the product, that's a lower regulatory bar to bring something to market.
Our approach really has been to focus on the 40 act structure on sort of the best in class US wrapped products so that they can be available to everybody out there.
But I think the market's going to continue to develop with different people with different strategies.
It's going to be a diverse and we're going to see what gets the most traction over time.
It's still a very, very nascent space.
And speaking of which, and building on what you just said, how does tokenization actually change liquidity as well as access for investors?
Yeah, so I think this is really about delivering these investment products on a common piece of infrastructure, something that is truly internet native, right?
And we've seen this throughout the evolution of financial markets, the more access people have then the more they're able to take control of their own financial lives and I think that's been a real driving ethos in the traction that we've seen in blockchain enabled finance in the growth of stablecoins, the capital that's now flowing on chain.
And so this really is about offering people this additional choice.
The infrastructure, you know, I think really enables the direction of travel that we've seen markets going in generally in terms of reducing settlement times, reducing friction, lowering, uh, the, the, the kind of burdens that come with uh actions like cross-border remittance and the like.
And you know if you have a technology that's internet native that's always up 24/7 that can settle instantly, this really pushes us forward to that more tea instant world that I think we've been heading to for a while.
And I do want to ask you about dual distribution.
So how does that actually bridge Trad Pi as well as Dei?
I think so this is really thinking about Enabling the products for both institutional and retail and making them available in the platforms and workflow tools that work for them.
I mean at the end of the day, the underlying exposures, whether it's money market funds, treasuries, equities, um, that exposure is wanted by almost everybody that participates in the market.
What differs is like how they want to use things.
Retail's tending more toward like a, first experience be that in some of the modern fintech apps or sort of self custody wallets that we're seeing grow up in the in the space.
If you're an institutional client with a sort of more robust control structure, then you need a workflow tool that kind of works for you and we've really put a lot of effort into both the underlying construction of the tokenized products as well as those subsequent workflow tools that allow it to integrate into both.
I think there's been a big Extension into the more of the kind of defi innovation that we've seen, be that around lending programs or like flash loans, AMMs for for doing exchange in real time.
Different clients are going to want different things and so making this available to everybody in the way they want to operate, I think is the key innovation here.
Yeah, and speaking of innovation and client demand, what are you looking ahead to when it comes to 2026 and beyond?
What are some of the conversations that you are having with stakeholders?
So I think moving a lot of kind of financial logistics problems on chain is going to be a big value unlocked for the industry.
Collateral management, I think is going to be kind of a huge part of this.
We've seen a lot of native innovation.
I've mentioned some of the Dei lending pools out there that have been really successful in increasing the velocity of assets on chain.
Um, and I think this is really important.
Collateral's a great use case because if you think about, um, the velocity being able to post and recall collateral, if you can do that substantially quicker, Tintant instead of T1 or T2 in some cases today, that velocity goes through the roof.
Therefore the amount of capital you need to allocate to it goes right down.
So finding problems like this that can be natively solved with.
Uh, the characteristics of tokenized assets, i.e., that it's sort of instant internet native 100% uptime, um, is what we'll really be looking for to push it forward and, and sort of enhance liquidity, usability integrations in 2026.
OK, Jason, well thank you so much for joining us as we head into your end and happy holidays.
Absolutely happy holidays to you too thank you.
