The Crypto Roundup: 19 September 2024

WisdomTree, the New York-based asset manager, has launched WisdomTree Connect, a new platform designed to broaden access to tokenized real-world assets (RWA) for businesses and other institutions. This platform allows users to interact with any WisdomTree-issued token via their own wallet across supported blockchains, without needing to rely on third-party intermediaries.

Through WisdomTree Connect, institutional users will now have the ability to directly purchase and redeem tokenized assets, either with US dollars or the USDC stablecoin, which is pegged 1:1 to the US dollar.

To further streamline the process, WisdomTree offers a conversion service through its subsidiary, WisdomTree Digital Movement, Inc., which converts stablecoins like USDC into fiat currency and vice versa. This service facilitates the purchase of shares in tokenized products like the WisdomTree Government Money Market Digital Fund (WTGXX), with record-keeping handled on-chain by WisdomTree Transfers, Inc.

At launch, the only tokenized asset available on the platform will be WTGXX, a digital fund accessible directly on the blockchain. Institutions and businesses will benefit from 24/7 access to these digital assets, and the platform's blockchain-integrated system ensures secure peer-to-peer transfers. WisdomTree also plans to expand access to other digital assets in the future.

WisdomTree Connect is initially available through a web portal and API, providing a user-friendly gateway for business clients. In the future, WisdomTree plans to explore additional ways for users to interact with the platform, including through a decentralized application (dApp).

With the support of the same proprietary tokenization technology used in WisdomTree's retail-focused app, WisdomTree Prime, the Connect platform aims to integrate traditional and decentralized finance systems. This enables crypto-native institutions to access traditional financial products, such as money market funds, directly within the blockchain ecosystem, removing the need for complex fiat-to-crypto conversions.

Dragonfly Capital, a crypto-focused venture firm, is in the process of raising $500 million for its fourth investment fund, according to someone familiar with the firm’s plans. The new fund will focus on backing early-stage projects in the digital asset space.

The company, based in San Francisco, has already accumulated $250 million and expects to complete its fundraising efforts by the first quarter of next year, said the source, who spoke on condition of anonymity due to the private nature of the information.

This fundraising drive places Dragonfly among a growing list of crypto venture firms turning to investors as the industry slowly rebounds from a significant downturn two years ago. Companies like Robot Ventures and Paradigm have also been raising capital in recent months. The timing of Dragonfly’s fundraising coincides with a highly contested U.S. presidential election, where Donald Trump has made promises to champion the cryptocurrency industry if re-elected.

According to Dragonfly’s website, the firm has invested in over 100 blockchain-based ventures, including projects like Ethena, Cosmos, and Monad Labs. The company's third fund, which raised $650 million, closed in 2022.

In an interview on Bloomberg Television, Rob Hadick, a general partner at Dragonfly, chose not to discuss the details of a fourth fund. Speaking on the sidelines of the TOKEN2049 conference in Singapore, he noted that the rise in venture capital investments this year has positioned the firm well for what’s ahead.

The crypto venture capital space is seeing renewed interest, driven by U.S. approval of Bitcoin ETFs. Pantera Capital is raising $1 billion for its Pantera Fund V, targeting blockchain assets, while Paradigm secured $850 million for its third fund, focused on early-stage blockchain projects.

The Reserve Bank of Australia (RBA) has announced that it will not be pursuing the development of a retail central bank digital currency (CBDC) in the near future. Instead, its focus will shift towards creating a wholesale CBDC.

During a speech at the Intersekt Fintech Conference in Melbourne on September 18, RBA Assistant Governor Brad Jones outlined the central bank's roadmap for the next three years, which is largely centred on wholesale digital currency infrastructure. Jones emphasized that the RBA is prioritizing wholesale digital money projects, as they offer more significant advantages to commercial banks and central financial systems compared to a retail CBDC.

According to the RBA's findings, a retail CBDC would provide minimal innovation for Australian consumers and would introduce potential risks such as higher borrowing costs, increased chances of bank runs, and challenges in implementing monetary policy. In contrast, a wholesale CBDC could reduce counterparty and operational risks, enhance transparency, improve liquidity and transaction capabilities, and lower compliance costs.

The immediate priority for the RBA is the public phase of Project Acacia, which will explore the implementation of wholesale CBDCs and tokenized deposits from commercial banks. Project Acacia will build on earlier CBDC research and aims to investigate potential cross-border applications with other regional central banks. Jones also mentioned that the RBA plans to establish advisory forums for industry and academic experts and support reforms for regulatory sandboxes to foster financial innovation.

Additionally, the RBA will conduct further research into the benefits of asset tokenization and the potential role of blockchain and smart contracts in its financial operations. The programmability of tokens and the ability to free up collateral by settling transactions on the same ledger are areas of interest in the bank's ongoing research.