• Registered digital securities will become ‘the new de facto digital marketplace’, says Digital Funds founder
  • WisdomTree filed last year to launch a short-term digital cash fund that would secondarily register its shares on one or more blockchains

A newly created digital asset manager that filed its first ETF last month is looking to bring another offering to market.

Digital Funds has filed an application to launch a Tokenized S&P 500 EW index fund that would invest primarily in the securities of issuers included in the S&P 500 Equal Weight Index, according to regulatory disclosure filed last week.

While the fund’s official shareholding record will be kept in book-entry form, they will also be registered — as digital tokens — on Algorand’s blockchain, the filing says. Fund units can optionally be registered on other blockchain protocols.

The fund will not invest in any assets that rely on blockchain technology, such as cryptocurrencies, the filing says.

Michael Willis, who founded Digital Funds in December, told Blockworks that registered digital securities will become “the new de facto digital marketplace” as the unregistered space comes under greater scrutiny from regulators.

“Until now, the market for recorded digital titles has lacked a high-quality, easy-to-evaluate, and instantly recognizable title,” he added. “As a result, adoption has been limited. We believe the endorsement of a branded tokenized index fund has the potential to shatter adoption in the open.

Similarly, WisdomTree filed last year to launch a Short-Term Digital Treasury Fund which would secondarily record its actions on one or more blockchains.

Sumit Roy, crypto editor and analyst for ETF.com, previously told Blockworks that it’s conceivable that the official stock record will live on the blockchain in the future – allowing investors to trade their stocks between peers – but noted that there are regulatory hurdles to clear first.

Digital Funds’ latest filing comes after the Florida-based company last month announced plans to launch an S&P 500 Bitcoin 75/25 Index ETF. The proposed fund would invest approximately 75% of its assets in large US companies within the S&P 500 Index and approximately 25% of its assets in bitcoin futures.

Willis called bitcoin “really volatile” at the time, noting that exposure to the S&P 500 provides more stability to a bitcoin portfolio.

“We believe registered digital securities will replace the current legacy financial system because they are better designed across the board,” Willis said, noting the benefits of selling from anywhere at any time, with immediate settlement. “Self-banking and peer-to-peer payments are a dream once thought impossible, but will soon become a reality.”

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  • Ben Strack

    Ben Strack is a Denver-based journalist who covers macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and served as a reporter and editor for various local Long Island newspapers. He graduated from the University of Maryland with a degree in journalism. Contact Ben by email at [email protected]