WisdomTree, which is a large asset manager that has $63.8 billion in assets, plans to launch a regulated stable coin. This is pending approval from the United States Securities and Exchange Commission. The stable coin would combine an enterprise level system and financial regulatory experience. It might even be the first American-regulated cryptocurrency exchange-traded fund.
The stable coin would be set to assets including gold, fiat currencies and government debt. No formal application has been filed as of January 19, 2020. This plan could signal a competition among large American asset managers for domination of the cryptocurrency sector. WisdomTree said that it's rushing to launch a regulated cryptocurrency in order to get ahead of industry giants, such as BlackRock and Fidelity Investments.
Macrae Sykes, who is a portfolio manager and analyst at Gabelli and Company, said that there is more interest in Bitcoin in the large asset management firms. Fidelity Investments said that the potential of cryptocurrency cannot be ignored. Others in the industry added that there is a desire to enter the game early in order to have the best chances at growing the investment.
An exchange-traded fund is a collection of securities obtained through a brokerage firm on one of the stock exchanges. WisdomTree is the seventh-largest in the United States. WisdomTree said that a stable coin is a natural extension of what it already does. A stable coin is usually linked to a stable asset, such as the United States dollar or gold. The value is kept close to that of the asset. In theory, this gets rid of a lot of market volatility. For example, the stable coins Tether and Gemini Dollar are paired on a one-to-one basis with the United States dollar.
WisdomTree added that the stable coin structure and exchange-traded fund structure are similar, but the people who use them are different. The stable coin would likely be used by cryptocurrency traders. Exchange-traded funds are used by everyday investors. The firm will have a big hurdle getting approval from the Securities and Exchange Commission, based on the rejections of other firms for their applications.