On February 25, 2026, The WisdomTree Treasury Money Market Digital Fund (code WTGXX) received exemption approval from the U.S. SEC and approval from FINRA, being officially recognized as the first registered tokenized mutual fund that can trade 7×24 hours, introducing on-chain shares and continuous trading mechanisms within a traditional fund framework. The current scale of the fund is approximately $730 million with an expense ratio of 0.25%, using USDC as the settlement medium, linked to short-term U.S. Treasury bonds and cash equivalents on one end, while connecting to on-chain wallets and crypto accounts on the other, exhibiting distinct crypto-native features under a compliant shell. Surrounding it is a collision on how regulatory working hours and approval processes can adapt to the 7×24-hour liquidity demands of the crypto market: regulators attempt to maintain order through exception exemptions, while technology and the market approach traditional boundaries, testing how much the system can be reshaped.
From Paper Filings to On-Chain Shares: WisdomTree's Regulatory Marathon
● The Game Behind the Long Timeline: WTGXX first submitted its application to the SEC on May 8, 2025, and submitted revised documents on January 16, 2026, spanning over a year, continuously supplementing technical details and compliance arrangements under the U.S. mutual fund regulatory framework. This period was not only the time for lawyers and compliance teams to refine terms, but also a process where the SEC internally weighed whether "tokenized shares should still be considered traditional fund shares," with each revision meaning a regulatory reassessment of the risks posed by the new structure.
● The Necessity of Dual Exemptions: To introduce tokenized shares within the mutual fund system and claim to support 7×24 hour trading, WTGXX had to break through multiple existing regulatory boundaries, thus requiring SEC exemptions and additional approvals from FINRA to cover the legal and self-regulatory gaps. Traditional rules assume trading occurs around the opening and closing of exchanges, applicable on business days and fixed settlement batches, while WTGXX aims to extend this framework into an "almost continuous" liquidity instrument, forcing regulators to recognize a structure that is legally a mutual fund but operationally closer to on-chain financial products.
● The Comparison Group of Traditional Money Market Funds: Ordinary money market funds rely on exchanges or on-site platforms' limited trading hours, and transactions are typically settled in T+0 or T+1 batches, with valuation and distribution concentrated at the end of the day. In contrast, WTGXX attempts to embed on-chain continuous trading logic into its compliant shell, utilizing tokenized shares to record holdings and allowing higher-frequency buy and sell orders to enter the system, thus still being regulated under the 1940 Act in form, while aligning the experience closer to the immediacy of on-chain assets.
The Cost of 7×24 Trading: The Dual Challenge of Broker Inventory and USDC Settlement
● Liquidity Design Detached from Exchange Matching: Unlike traditional funds relying on matching on main boards, WTGXX opts to depend on broker-dealer proprietary inventories rather than exchange order books, quoting continuous buy and sell prices based on the fund’s latest net asset value and market conditions over-the-counter. This model bypasses the constraints of exchange trading hours, theoretically allowing for near around-the-clock buying and selling of shares, but at the cost of concentrating liquidity and price discovery more within a few inventory providers, leading to more detailed compliance requirements from regulators regarding inventory management and price fairness.
● The Connection Dilemma of USDC Settlement: WTGXX uses USDC as the settlement asset, meaning that investors pay and receive dollar tokens in crypto form on-chain or through brokerage channels, while the fund's underlying assets and share registries remain within traditional securities custody and registration systems. The back-and-forth flow of funds between USDC and bank accounts involves synchronization issues around clearing points, alignment of on-chain records with ledger records, and how anti-money laundering and KYC requirements sync between the two systems, which represents both the flexibility brought about by programmable settlement and the reality friction dragging “on-chain composability” into a stringent compliance track.
● The Commitment to 7×24 and the Gray Areas of Technology: In its promotions, WTGXX is positioned as a tokenized fund that can trade 7×24 hours, but in practice, factors such as system maintenance windows, compliance review batches, and risk control threshold adjustments may restrict order execution or price updates during specific time periods. Due to the lack of detailed technical parameters and operational guidelines in publicly available documents, it is difficult to ascertain the elastic boundaries of "7×24" under extreme market conditions, technical failures, or regulatory interventions; this uncertainty also becomes a gray area that both future markets and regulators must continuously validate.
Interest On-Chain: How to Rewrite Interest Calculation and Distribution within a Compliance Framework
● The Tokenization Translation of Yield Vehicles: Money market funds are essentially packages of short-term U.S. Treasury bonds and cash equivalent yields, providing investors with cash-like returns and liquidity through investments in Treasury bills, repurchase agreements, and other low-risk assets. WTGXX attempts to express this yield in the form of tokenized shares, recording and distributing it at an on-chain pace, allowing holders to see yield accumulation in their wallets or brokerage accounts synchronized with on-chain status, translating "interest" from the traditional balance sheet into traceable and calculable balance changes in the on-chain world.
● From End-of-Day Valuation to High-Frequency Updates: In a traditional structure, funds typically calculate net asset value and yield distribution on an end-of-day valuation basis, meaning investors’ yield experiences and information flows are timed in “daily” units. Once tokenized, if it wants to align with finer-grained on-chain trading instructions and capital flows, it necessitates more frequent net asset value updates and interest calculations, at least at the system level continuously recording holding periods and corresponding yield accruals. This poses higher demands on risk management, IT systems, and disclosure mechanisms: how to support denser data refreshes and external synchronization without sacrificing robustness becomes a critical technical and compliance intersection that the SEC must closely examine during approval.
● The Boundary Conditions Set by the SEC: To avoid misinterpretation of WTGXX as a high-risk crypto asset in the market post-tokenization, the SEC will inevitably set clear boundaries on yield distribution methods, frequency of information disclosure, and investor suitability. For instance, requiring more timely and standardized disclosures on key events such as yield volatility, changes in underlying assets, and adjustments in USDC settlement channels, while ensuring that both sales and holding objects continue to meet the suitability standards of mutual funds rather than being funneled to completely unprotected on-chain investment fields. The fact that WTGXX can obtain exemptions indicates that it must be designed to lean toward the "conservative side" in exchange for regulatory trust.
A Corner of Ethereum's Narrative: The Tug-of-War Between DeFi Ideals and Compliance Realities
● The Reality Reflection of Vitalik's Narrative: Vitalik Buterin has repeatedly emphasized that "DeFi is at the core of Ethereum's value, and financial empowerment is key to autonomy,” and within this narrative, WTGXX can be seen as a piece of the puzzle that transports traditional financial assets onto the chain. It does not disrupt the existing order; instead, in the technological context of public chains like Ethereum, it "translates" the yields of government bonds and cash equivalents into perceptible rights on the chain, enabling Ethereum's value proposition to access the global capital market's fringe through a product registered and recognized by the SEC for the first time.
● The Tension Between Vision and Reality: The vision proposed by the Ethereum Foundation is to "build a permissionless, security-first global financial system," while WTGXX represents a highly permissioned, strong KYC, and regulatory-embedded tokenized fund, creating a natural tension between the two. On one hand, it proves that public chain technology can be included in a compliance framework, becoming part of institutional-grade financial infrastructure; on the other hand, the insistence on permission and thresholds contrasts with the fully permissionless spirit of DeFi, suggesting that for a considerable time in the future, "compliance tokenized finance" will run parallel to "pure DeFi," potentially even constraining each other in terms of liquidity and asset usage.
● The Imagination and Obstacles of Integrating with DeFi Protocols: If we look ahead, whether compliant tokenized funds like WTGXX can tap into open lending or derivatives protocols to become on-chain collateral is a highly anticipated question in the industry. The real-life obstacles are that fund shares are subject to strict KYC and holder restrictions, how to allow them to enter permissionless lending pools while maintaining regulatory visibility; how protocols will recognize and enforce compliance requirements; and in extreme circumstances, whether regulators will demand a blockage of interactions with specific addresses or protocols—all these determine to what extent WTGXX can participate in truly open DeFi liquidity networks.
In a Market of Extreme Panic, the Introduction of a Compliant Tokenized Fund
● Regulatory Breakthrough at an Emotional Low Point: On the same day WTGXX was approved, the cryptocurrency Fear and Greed Index stood at 11, in the officially defined "Extreme Fear" range, reflecting a notable contraction in overall market risk appetite and increasing caution among traditional funds. In this emotional backdrop, a tokenized money market fund backed by short-term U.S. Treasury bonds and cash equivalents, jointly endorsed by the SEC and FINRA, stands out markedly: the market is contracting leverage and reducing risk exposure, while regulation quietly opens a compliant channel for the next phase of on-chain capital allocation.
● Dual Interpretation at a Subtle Moment: Launching a tokenized money market fund during a downward risk appetite cycle provides a chainside docking point for risk-averse funds—holders can switch their positions to yield tools supported by short-term U.S. Treasury bonds without completely leaving the on-chain ecosystem; on the other hand, it can also be seen as laying the groundwork for the next market cycle, positioning WTGXX-style products on the sidelines to provide a relatively smooth path for transitions between on-chain and traditional capital when risk appetite rebounds.
● Attractiveness and Concerns from Traditional Capital: From the perspective of traditional institutions and high-net-worth investors, WTGXX's selling points lie in its compliant shell and U.S. dollar asset enhancement—the asset pool primarily comprises high-credit assets like U.S. Treasuries, with a mature regulatory disclosure mechanism, while also being able to access on-chain accounts and USDC settlement channels. However, doubts persist: in a reality where on-chain security incidents are frequent and on-chain liquidity can severely drain during extreme market conditions, whether WTGXX can maintain stable trading and redemption amid significant volatility remains an issue yet to be stress-tested for system design and regulatory coordination.
From Isolated Experiment to New Infrastructure: The Next Journey of Tokenized Mutual Funds
● Outlining the Boundaries of Innovation: The significance of WTGXX does not lie in completely reconstructing finance, but in demonstrating a path that introduces some on-chain advantages without touching the SEC's bottom line. Through tokenized shares, USDC settlement, and near 7×24 hour trading arrangements, it creates a "controlled testing ground" constrained by strict rules, where decentralized technology is incorporated within centralized regulatory frameworks, forming a compromise: retaining audit, disclosure, and investor protection while making fund migrations between on-chain and traditional accounts smoother.
● Potential Followers and Expansion of Asset Landscapes: Once the operation of WTGXX is proven manageable and market demand exists, other asset managers' motivation to replicate its USDC settlement and 7×24 trading model will significantly increase. By then, the tokenized targets need not be limited to short-term government bonds but could extend to longer-term bond portfolios, investment-grade corporate bonds, and even multi-asset money market instruments, migrating a larger scale of traditional assets to on-chain registration and clearing environments within the approved regulatory range, driving simultaneous expansions in the depth and breadth of "on-chain asset pools."
● Open Issues and Reshaping Global Capital Flows: What truly determines the path's influence is a series of open questions without conclusions: in a 24-hour nonstop market, how will regulators address suddenly emerging black swan events; how will responsibilities for trading interruptions or mismatches caused by technical failures and human errors be divided among fund managers, brokers, on-chain infrastructure, and investors; and as more tokenized funds underpinned by U.S. dollar assets become programmatically accessible globally, will cross-border capital flows experience structural reconstruction as a result. WTGXX is just the first piece of the puzzle, and how far it can go depends on the continued interplay and compromise between regulation, technology, and the market over the next few years.
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