Digital Funds, a digital asset manager, is looking forward to launching a tokenized S&P 500 EW Index Fund. It would invest in the securities of issuers included in the S&P 500 Equal Weight Index. Its official record of share ownership will be maintained in book-entry form. It will also be recorded as digital tokens on the Algorand blockchain.
The filing highlighted that the fund will not invest in any assets that rely on blockchain technology, like cryptocurrencies. Michael Wills, the founder of Digital Funds, said the registered digital securities will become the new de facto digital marketplace. He highlighted that the registered digital securities marketplace, until now, lacked a high-quality, easy-to-price, immediately recognizable security. As such, adoption has been limited. Wills said the approval of a marquee tokenized index fund is likely to break adoption wide open.
In 2021, Wisdom Tree launched a similar product – Digital Short-Term Treasury Fund to secondarily record its shares on one or more blockchains. Digital Funds’ latest filing comes after it revealed plans to launch an S&P 500 Bitcoin 75/25 Index ETF. It would invest around 75% of its assets in large US companies within the S&P 500 Index, and 25% of its assets in Bitcoin futures contracts. At that time, Wills had said Bitcoin was really volatile. He pointed out that S&P 500 exposure provides more stability to the Bitcoin portfolio.
Wills believes that registered digital securities will replace the current financial legacy system. He says they are better engineered at every level. Plus, there are advantages of selling them from anywhere at any time.