Wave and Vertalo start by tokenizing yield, with race horses and whiskey as long term possibilities

Quick Take

  • Vertalo and Wave’s partnership could open the door to tokenization of physical assets
  • The partnership began with the tokenization of Wave’s bitcoin yield fund, issuing Fund Tokens to fractionalize the yield

Asset management firm Wave Financial launched its first bitcoin yield fund last month with the help of Vertalo, the tokenization solution company that helped PrimeTrust put cap tables on blockchain earlier this year. Wave touts the fund as the first crypto derivatives-based yield fund on the market, but the partnership is planning to expand to legacy markets.  

The fund itself generates yield by selling call options on bitcoin held in the fund, generating premiums from the high volatility. The income pays out monthly by distributing a dividend of 1.5% of the native asset value each month. Wave said it expects an 18% annual target yield. Fidelity Digital Assets custodies the fund’s BTC. 

On the tokenization front, Wave is issuing Fund Tokens related tot he yield fund that aren’t registered with the Securities and Exchange Commission, meaning U.S. investors will have to stay on the bench. In order to execute a tokenized fund, Wave said Vertalo had all the right connections. Dave Hendricks, CEO of Vertalo, said they’re the only player in the industry that could get this tokenization effort off the ground.

“There was no other provider on the market that could work with all of the other providers needed to make this fund happen,” he said. “We were already partners with the other participants they were working with, and we were the missing piece.”

Benjamin Tsai, managing partner and president at Wave, said that while there are a number of players in the space, Vertalo gives the fund flexibility to be more integrated w