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ArbitrumDAO Approves 35M ARB for STEP 2 with Franklin Templeton, Spiko, WisdomTree

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  • ArbitrumDAO allocates 35M ARB to accelerate RWA institutional adoption via STEP 2.
  • Franklin Templeton, Spiko, and WisdomTree secure 35M ARB for tokenized U.S. Treasurys.
  • ArbitrumDAO’s STEP program boosts treasury with 35M ARB targeting yield growth.

The Arbitrum DAO has approved the next step of its Stable Treasury Endowment Program (STEP)—a significant step towards expanding its treasury into tokenized U.S. treasuries. The DAO distributed 35 million ARB, equivalent to $11.6 million, to 3 institutional partners. Franklin Templeton, Spiko, and WisdomTree. 

Having received over 50 submissions from different issuers, this decision has been confirmed after a full review, solidifying the DAO’s focus on securing regulated, yield-bearing assets for its treasury.

Details of the STEP 2 Allocation

As part of the STEP 2 initiative, the Arbitrum DAO allocated 35% of the funds to Franklin Templeton’s FOBXX, which is tokenized as BENJI, and another 35% to Spiko’s USTBL. The remaining 30% was allocated to WisdomTree’s WTGXX. 

These allocations are part of a strict request for proposal (RFP) process, intending to achieve a balance of risk-adjusted return, fee, and overall community participation. After evaluating the proposals, a committee comprised of members elected from the community made the final selection.

This move is a notable advancement for Arbitrum, which has long been at the crossroads between cryptocurrency and traditional finance (TradFi). Matthew Fiebach, co-founder of Entropy Advisors, refers to the involvement of Franklin Templeton, Spiko, and WisdomTree in an initiative led by DAO as a milestone for the crypto industry.

The Growing Market for Tokenized U.S. Treasuries

The STEP program, unveiled in July 2024, is intended to diversify Arbitrum’s treasury with tokenized real-world assets (RWAs), mainly short-duration U.S. Treasuries. The DAO’s initial investments have yielded approximately $700,000 in yield, with over $30 million invested into products like BlackRock’s BUIDL, Ondo’s USDY, and Mountain Protocol’s USDM.

Tokenized U.S. Treasuries are increasing in interest, with BUIDL’s BlackRock leading with over $2.8 billion in assets under management. Followed by Franklin Templeton’s BENJI, the second-largest tokenized offering at $763 million in AUM. Interest has grown in the market as more institutions seek to tap into the benefits of using blockchain technology to navigate the requirements of maintaining a secure, compliant, and liquid asset structure.

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Source: Arbitrum

Future of the STEP Program and Arbitrum’s Treasury Expansion

With this new allocation, Arbitrum DAO has deployed over $45 million across eight issuers, reaffirming its real-world asset adoption commitment. Over the past year, Arbitrum has experienced a 50-fold increase in RWAs held on its blockchain. 

This success places the DAO in a position to continue to grow, entering into early-stage ventures, credit strategies, and commodities. The STEP program also addresses idle capital inefficiencies, making better use of treasury funds while generating passive yield.

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WisdomTree Connect Expands to Support Arbitrum, Avalanche, Base and Optimism Blockchains

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  • WisdomTree Connect now offers 13 SEC-registered tokenized funds across five blockchains.
  • The platform expansion includes Arbitrum, Avalanche, Base, and Optimism blockchains.
  • WisdomTree’s tokenized funds grew to nearly $130 million in AUM, up from $15 million.

Asset management firm WisdomTree expanded its institutional investment platform to support diverse blockchain networks through new functionality. The platform started on Ethereum but added support for Arbitrum, Avalanche, Base and Optimism.

The expansion of WisdomTree Connect reflects the company’s mission to broaden access to its 13 tokenized funds across multiple investment strategies, including money markets, equity indices and fixed income.

Expansion of WisdomTree Connect Platform

The firm implements strategic expansion steps to fulfill expanding institutional requirements for tokenized assets. The platform extends fund options through five different blockchains which enables investors to manage funds either through U.S. dollars or Circle’s USDC stablecoins.

This feature allows clients to manage their tokenized funds in various ways that suit their needs. Platform investors maintain financial freedom through third-party wallet holdings and self-custodial wallet solutions which creates flexibility for institutional users.

The newly added blockchains—Arbitrum, Avalanche, Base and Optimism—are expected to enhance the platform’s reach. The asset manager’s Head of Business Development, Digital Assets, Maredith Hannon, pointed out the need to offer investors a choice as to which blockchain to invest in. The expansion enables investors to trade on the tokenized funds over different networks without leaving their original platforms, increasing user experience on board.

Tokenized Funds and Investment Strategies

All tokenized funds under WisdomTree Connect have expanded into multiple investment options. The WisdomTree Government Money Market Digital Fund (WTGXX) represents a short-term government security fund while the firm’s 500 Digital Fund (SPXUX) and the WisdomTree Technology & Innovation 100 Digital Fund (TECHX) form part of its equity index fund offerings. Additionally, fixed income offerings linked to various Treasury durations and inflation-protected securities are available.

The investment funds follow the Investment Company Act 1940 to register with the U.S. Securities and Exchange Commission (SEC) and maintain regulatory compliance standards. The asset manager’s entry into tokenized assets demonstrates a business trend that asset managers across the financial industry follow by incorporating traditional financial instruments into blockchain technology.

Growing Interest in Tokenized Assets

The growth of the platform and its assets under management show stronger institutional demand for tokenized assets. The asset manager’s tokenized fund assets managed over $130 million, transforming from the initial value of $15 million at the beginning of the year.

Ondo Finance’s strategic partnership with WisdomTree generated this boost by utilizing over $100 million from one of the money market funds to provide collateral for its digital offerings.

Bitcoin Adoption: Big Win for WisdomTree

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WisdomTreeFunds, a prominent provider of Bitcoin Spot ETFs, is collaborating closely with the New York Department of Financial Services [NYDFS] to extend its crypto-related offerings to customers within New York. In a positive development, NYDFS is reportedly on the verge of approving a Limited Purpose Trust Charter to WisdomTree, signifying its ability to conduct digital asset business activities in the state. Notably, only nine other entities, including industry giants Coinbase and Fidelity Digital Assets, currently hold Limited Purpose Trust Charters for crypto-related operations.

The resilience of Bitcoin exchange-traded funds [ETFs] has become evident within three weeks of their launch, with robust trading volumes overcoming recent market downturns. The ARK 21Shares BTC ETF [ARKB] leads the pack, closely followed by Fidelity’s FBTC. In contrast, the well-established Grayscale Bitcoin Trust [GBTC] has experienced a decline amid the ascending fortunes of its counterparts.

WisdomTree’s US spot bitcoin fund, introduced on January 11 alongside nine competitors, has recorded approximately $10 million in inflows during the initial 15 trading days, according to Bloomberg Intelligence data. While this represents the lowest inflow among the nine US-spot bitcoin ETFs launched, WisdomTree executives remain optimistic, anticipating increased adoption as more financial advisers allocate to such products.

WisdomTree’s Bitcoin Game Plan

Despite lagging behind other fund issuers in terms of bitcoin ETF inflows, WisdomTree executives express confidence, highlighting the firm’s consumer app as a superior method for holding bitcoin compared to the ETF wrapper.

Bitcoin
Bitcoin Adoption: Big Win for WisdomTree 3

Jarrett Lilien, the company’s Chief Operating Officer, emphasized during a recent earnings call that the growth of assets under management [AUM] takes time, particularly in their model, given that these products are not yet available on many adviser platforms where significant flows are expected.

We’re confident in our ability and our track record in growing [assets under management]. That said, it does take time, especially in our model, because these products are not yet available on many adviser platforms, which is where we would expect to see most of our flows.

In addition to its endeavors in the US market, WisdomTree underlined its robust presence in European Exchange-Traded Products [ETPs], boasting over half a billion in AUM in that region. The Bitcoin issuer achieved a significant milestone at the end of 2023, surpassing $100 billion in assets under management, marking a record for the firm.

WisdomTree’s Spot Bitcoin ETF Gains Traction with Revised Filing

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WisdomTree, the asset management firm, has resubmitted its revised prospectus (S-1 filing) for a spot Bitcoin Exchange Traded Fund (ETF) to the U.S. Securities and Exchange Commission (SEC). This resubmission is a crucial step in the process that all issuers of Exchange Traded Products must undergo before the launch of their spot Bitcoin ETFs.

WisdomTree’s Determination for Spot Bitcoin ETF

Bloomberg ETF analyst James Seyffart share via X post, WisdomTree remains committed to launching a spot Bitcoin ETF and is actively engaged in discussions with the SEC. The resubmission of the S-1 filing reflects the ongoing efforts and dialogue between WisdomTree and the regulatory body.

Seyffart clarified the nature of the S-1/Prospectus amendment, stating:

This just means WisdomTree is still planning to launch an ETF and is in talks with the SEC’s corp fin division. All issuers were expected to file one of these to potentially launch their ETF at some point. Just a step in the process. Nothing critical.

The custodian for WisdomTree’s spot Bitcoin ETF product is Coinbase, a leading cryptocurrency exchange. Additionally, the benchmark for the ETF is the CME CF Bitcoin Reference Rate – New York Variant, according to insights provided by Bloomberg analyst Henry Jim.

WisdomTree’s engagement with the SEC involves four key filings, according to Jim, indicating the comprehensive approach taken by the asset management company in navigating the regulatory landscape.

Market participants are currently on the edge of their seats, eagerly awaiting the SEC’s decision on Franklin Templeton’s Bitcoin ETF application. The deadline for this decision is November 17, adding a sense of urgency and anticipation to the crypto investment community. Notably, the regulator has opted to defer decisions on applications from Hashdex and Grayscale, pushing their potential approval or rejection to 2024.

As the crypto industry continues to seek legitimacy and acceptance within traditional financial markets, the ongoing developments surrounding WisdomTree’s spot Bitcoin ETF serve as a barometer for the evolving relationship between cryptocurrency and regulatory bodies.

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Bitcoin Takes Center Stage: WisdomTree & BlackRock Spark ETF Frenzy

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WisdomTree, a prominent provider of exchange-traded funds (ETFs), has taken a significant step towards embracing the world of cryptocurrencies. The company has filed an application seeking approval to launch the WisdomTree Bitcoin Trust, an ETF that will be listed on the Cboe BZX Exchange. 

This move follows closely on the heels of BlackRock’s recent application for a spot bitcoin ETF, indicating a growing interest and recognition of bitcoin within the traditional finance sector.

Bitcoin Trust Structure & Custodial Arrangements

The WisdomTree Bitcoin Trust, as outlined in the application document, will be an exchange-traded fund that issues common shares of beneficial interest. These shares, trading under the ticker symbol “BTCW,” will be listed on the Cboe BZX Exchange. 

The Trust will hold BTC as its primary asset and will value its shares daily based on the C.F. Bitcoin U.S. Settlement Price, which is determined by aggregating trade flow data from major BTC spot exchanges.

One notable aspect of the Trust’s operations is its intention to conduct “in-kind” transactions with Authorized Participants. 

These financial firms, authorized to purchase or redeem shares with the Trust, will deliver or facilitate the delivery of BTC to the Trust’s custodian, U.S. Bank, National Association. This method allows for the seamless exchange of BTC for shares and vice versa.

While the Trust’s investment objective is to gain exposure to the price of BTC, it also aims to comply with specific requirements to provide investors with protections similar to those offered by the Investment Company Act of 1940.

The Trust will custody its assets at a bank meeting the Act’s requirements, provide daily disclosures of portfolio holdings and net asset value, and undergo annual audits by an independent registered public accounting firm.

The filing of both WisdomTree and BlackRock for spot Bitcoin ETFs underscores the increasing recognition of BTC’s potential in traditional finance. 

Despite previous rejections of spot ETF applications by the Securities and Exchange Commission (SEC), the approval of Bitcoin futures ETFs has opened doors for further exploration of regulated investment vehicles in the BTC market. 

These filings may mark a significant turning point, potentially attracting a new wave of institutional investors to the cryptocurrency space. However, with the potential approval of these spot Bitcoin ETFs, broader adoption and increased institutional participation in the market may soon follow.

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