WisdomTree, Inc. 10-K

ITEM 1. BUSINESS Our Company We are a global financial innovator, offering a well-diversified suite of world-class exchange-traded products, or ETPs, models and solutions. We empower investors to shape their future and support financial professionals to better serve their clients and grow their businesses. We leverage the latest financial infrastructure to create products that provide access, transparency and an enhanced user experience. Building on our heritage of innovation, we are also developing next-generation digital products and structures, including digital or blockchain-enabled mutual funds (“Digital Funds”) and tokenized assets, as well as our blockchain-native digital wallet, WisdomTree Prime ™ . We have approximately $82.0 billion in assets under management, or AUM, as of December 31, 2022. Our family of ETPs includes products that provide exposure to equities, commodities, fixed income, leveraged-and-inverse, currency, cryptocurrency and alternative strategies. We have launched many first-to-market products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform. Most of our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other industry indexes use a capitalization weighted methodology. These products are distributed through all major channels in the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force. We believe technology is altering the way financial advisors conduct business and through our Advisor Solutions program we offer technology-enabled and research-driven solutions including portfolio construction, asset allocation, practice management services and digital tools to help financial advisors address technology challenges and grow and scale their businesses. We are at the forefront of innovation and believe that leveraging the utility of blockchain technology is the next evolution in financial services. We are building the foundation that will allow us to lead in this coming evolution with the development of our mobile application, WisdomTree Prime ™ , and the launching of Digital Funds and tokenized assets. WisdomTree Prime ™ is a blockchain-native wallet developed for saving, spending and investing in both native crypto assets and tokenized versions of mainstream financial assets (e.g., physical gold). It will allow retail consumers to purchase, sell and exchange dollar tokens, gold tokens, other digital assets and blockchain assets, such as Digital Funds, made available in the mobile application. We recently tokenized real-world assets like physical gold (i.e., gold tokens) and U.S. dollars. We also achieved key milestones with the U.S. Securities and Exchange Commission, or SEC, declaring effective the registration of the WisdomTree Short-Term Treasury Digital Fund (WTSYX) and nine other Digital Funds. These funds provide a variety of different exposures to fixed income and equity securities, with secondary recording of shares on one or more blockchains (e.g., Stellar or Ethereum). Our limited purpose broker-dealer, WisdomTree Securities, Inc., or WT Securities, also received membership approval from the Financial Industry Regulatory Authority, or FINRA, to facilitate transactions in Digital Funds offered in the WisdomTree Prime ™ mobile application. As we continue to pursue our digital assets and blockchain strategy, we are embracing a concept we refer to as “responsible DeFi,” which we believe can embody choice, transparency, and inclusivity while upholding the foundational principles of regulation in this innovative and quickly evolving space. We were incorporated under the laws of the state of Delaware on September 19, 1985 as Financial Data Systems, Inc., were renamed WisdomTree Investments, Inc. on September 6, 2005, and ultimately renamed WisdomTree, Inc. on November 7, 2022. 2 Table of Contents Assets Under Management WisdomTree ETPs We offer ETPs covering equity, commodity, fixed income, leveraged-and-inverse, currency, alternatives and cryptocurrency. The chart below sets forth the asset mix of our ETPs at December 31, 2020, 2021 and 2022: Our Operating and Financial Results We operate as an ETP sponsor and asset manager, providing investment advisory services globally through our subsidiaries in the U.S. and Europe. U.S. Listed ETFs The AUM of our U.S. listed exchange traded funds, or U.S. listed ETFs, increased from $48.2 billion at December 31, 2021 to $56.0 billion at December 31, 2022 due to net inflows, offset by market depreciation. 3 Table of Contents European Listed ETPs The AUM of our European listed (including internationally cross-listed) ETPs, or European listed ETPs, decreased from $29.3 billion at December 31, 2021 to $26.0 billion at December 31, 2022, due to net outflows and market depreciation. Sale of our Former Canadian ETF Business In February 2020, we completed the sale of all of the outstanding shares of our wholly-owned Canadian subsidiary, WisdomTree Asset Management Canada, Inc., or the Canadian ETF business, to CI Financial Corp. We received CDN $3.7 million (USD $2.8 million) in cash at closing and were subsequently paid CDN $3.0 million (USD $2.4 million) of additional cash consideration based on the achievement of certain AUM growth targets. We may receive additional cash consideration of CDN $0 to $4.0 million depending on the achievement of certain AUM growth targets as determined on the 36-month anniversary of the closing date. No value has been ascribed to these contingent payments at December 31, 2022 and 2021. Our Canadian ETF business reported operating losses during the year ended December 31, 2020 of $0.4 million. Consolidated Operating Results The following table sets forth our revenues and net income/(loss) for the last three years. • Revenues – We recorded operating revenues of $301.3 million during the year ended December 31, 2022, essentially unchanged from the year ended December 31, 2021. 4 Table of Contents • Expenses – Total operating expenses increased 12.1% from the year ended December 31, 2021 to $241.3 million primarily due to higher incentive compensation and headcount, professional fees, including $4.5 million incurred in response to an activist campaign and professional fees associated with our digital assets business, fund management and administration costs, sales and business development expenses, marketing expenses, third-party distribution fees and other expenses. These increases were partly offset by lower occupancy expenses and depreciation and amortization expenses. • Other Income/(Expenses) – Other income/(expenses) includes interest income and interest expense, gains/(losses) on revaluation of deferred consideration–gold payments, impairments, loss on extinguishment of debt and other losses and gains. For the years ended December 31, 2021 and 2022, the gain on revaluation of deferred consideration–gold payments was $2.0 million and $27.8 million, respectively. In addition, during the years ended December 31, 2021 and 2022, we recognized losses on our financial instruments owned of $3.7 million and $16.5 million, respectively. • Net income/(loss) – We reported net income of $49.8 million and $50.7 million during the years ended December 31, 2021 and 2022, respectively. The change was impacted primarily by the change in revenues and expenses described above, a favorable change in the revaluation of deferred consideration–gold payments of $25.7 million, an impairment recognized in the prior year of $16.2 million, higher losses on our financial instruments owned of $12.8 million and other miscellaneous items. See “Non-GAAP Financial Measures” included in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information. Seasonality We believe seasonal fluctuations in the asset management industry are common, however such trends are generally masked by global market events and market volatility in general. Therefore, period to period comparisons of our or the industry’s flows and operating results may not be meaningful or indicative of results in future periods. Our Industry – ETPs We believe ETPs have been one of the most innovative investment products to emerge in the last two decades in the asset management industry. As of December 31, 2022, aggregate AUM of ETPs globally was $9.3 trillion. The chart below reflects the AUM of the global ETP industry since 2006: Source: ETFGI LLP 5 Table of Contents As of December 31, 2022, we were the thirteenth largest ETP sponsor globally based on AUM. GLOBAL RANKING Rank ETP Sponsor AUM (in billions) 1 iShares $2,952 2 Vanguard $2,037 3 State Street $1,048 4 Invesco $395 5 Charles Schwab $259 6 Nomura $197 7 Amundi $172 8 Xtrackers $154 9 First Trust $135 10 JPMorgan $100 11 Nikko AM $90 12 Daiwa $86 13 WisdomTree $82 14 UBS $75 15 Dimensional $72 Source: Morningstar Exchange traded funds, or ETFs, have become more popular among a broad range of investors as they come to understand the benefits of ETFs and use them for a variety of purposes and strategies, including low-cost index investing and asset allocation, access to specific asset classes, protective hedging, income generation, arbitrage opportunities and diversification. While ETFs are similar to mutual funds in many respects, they also have some important differences: • Transparency. ETFs disclose the composition of their underlying portfolios on a daily basis, unlike mutual funds, which typically disclose their holdings every 90 days. • Intraday trading, hedging strategies and complex orders . Like stocks, ETFs and other exchange-traded products can be bought and sold on exchanges throughout the trading day at market prices. ETFs update the indicative values of their underlying portfolios every 15 seconds. As publicly-traded securities, ETF shares can be purchased on margin and sold short, enabling the use of hedging strategies, and traded using limit orders, allowing investors to specify the price points at which they are willing to trade. • Tax efficiency. In the U.S., whenever a mutual fund or ETF realizes a capital gain that is not balanced by a realized loss, it must distribute the capital gain to its shareholders. These gains are taxable to all shareholders, even those who reinvest the gain distributions in additional shares of the fund. However, most ETFs typically redeem their shares through “in-kind” redemptions in which low-cost securities are transferred out of the ETF in exchange for fund shares in a non-taxable transaction. By using this process, ETFs can avoid the transaction fees and tax impact incurred by mutual funds that sell securities to generate cash to pay out redemptions. See “U.S. Regulation” for a discussion about draft tax legislation proposed in 2021 that would eliminate this chief tax advantage. • Uniform pricing. From a cost perspective, ETFs are one of the most equitable investment products on the market. Investors in a U.S. listed ETF pay identical advisory fees regardless of the investors’ size, structure or sophistication. Unlike mutual funds, U.S. listed ETFs generally do not have different share classes or different expense structures for retail and institutional clients and ETFs typically are not sold with sales loads or 12b-1 fees. In many cases, ETFs offer lower expense ratios than comparable mutual funds. ETFs are used in various ways by a range of investors, from conservative to speculative uses including: • Low-cost index investing. ETFs provide exposure to a variety of broad-based indexes across equities, fixed income, commodities and other asset classes and strategies, and can be used as both long-term portfolio holdings or short-term trading tools. ETFs offer an efficient and less costly method by which to gain exposure to indexes as compared to individual stock ownership. • Improved access to specific asset classes. Investors often use ETFs to gain access to specific market sectors or regions around the world or a particular asset, such as physical gold, by investing in an ETF that holds a portfolio of securities in that region or segment rather than gaining exposure by purchasing individual securities or physical commodities. • Asset allocation. Investors seeking to invest in various asset classes to develop an asset allocation model in a cost-effective manner can do so easily with ETFs, which offer broad exposure to various asset classes in a single security. 6 Table of Contents • Protective hedging. Investors seeking to protect their portfolios may use ETFs as a hedge against unexpected declines in prices of securities arising from market movements and changes in currency and interest rates. • Income generation. Investors seeking to obtain income from their portfolios may buy fixed income ETFs that typically distribute monthly income or dividend-paying ETFs that encompass a basket of dividend-paying stocks rather than buying individual stocks. • Speculative investing. Investors with a specific directional opinion about a market sector may choose to buy or sell (long or short) an ETF covering or leveraging that market sector. • Arbitrage. Sophisticated investors may use ETFs to exploit perceived value differences between the ETF and the value of the ETF’s underlying portfolio of securities. • Diversification. By definition, ETFs represent a basket of securities and each fund may contain hundreds or even thousands of different individual securities. The “instant diversification” of ETFs provides investors with broad exposure to an asset class, market sector or geography. The ETF sector of the asset management industry continues to demonstrate that it is favored among investors. According to Morningstar Direct, from January 1, 2020 through December 31, 2022, equity ETFs have generated positive inflows of approximately $2.0 trillion, while long-term equity mutual funds have generated outflows of approximately ($427) billion. In addition, ETF fixed income flows are benefiting from a broader range of investors gravitating toward fixed income products in the ETF structure. We believe this trend is due to the inherent benefits of ETFs – transparency, liquidity and tax efficiency. We believe that our growth, and the growth of the industry in which we operate, will continue to be driven by the following factors: • Education and greater investor awareness. Over the last several years, ETPs have been taking a greater share of inflows and AUM from mutual funds. We believe investors have become more aware of some of the deficiencies of mutual funds and other financial products and are increasing their focus on important characteristics of their traditional investments – namely transparency, tradability, liquidity, tax efficiency and fees. Their attention and education focused on these important investment characteristics may be one of the drivers of the shift in inflows from traditional mutual funds to ETPs. We believe these products will continue to take market share from traditional mutual funds and other financial products or structures such as hedge funds, separate accounts and individual stocks as investors continue to become more aware and educated about ETPs and their benefits. • Move to fee-based models. Financial advisors are shifting their business model from one that is “transaction-based,” that is, based on commissions for trades or receiving sales loads, to a “fee-based” approach, where an overall fee is charged based on the value of AUM. This fee-based approach lends itself to the advisor selecting lower-fee financial products, and in our opinion, better aligns advisers with the interests of their clients. Since ETFs generally charge lower fees than mutual funds, we believe this model shift will benefit the ETF industry. • Innovative product offerings. ETPs are now available for virtually every asset class including equities, fixed income, commodities, alternative strategies, leveraged-and-inverse, currencies and cryptocurrencies (with greater access in markets outside the U.S.). However, we believe that there remain substantial areas for sponsors to continue to innovate, including cryptocurrency, liquid alternative, thematic and ESG strategies. We also believe the further expansion of ETPs will fuel additional growth and investments from investors who typically access these products through hedge funds, separate accounts, stock investments or the futures and commodity markets. • Changing demographics. As the “baby boomer” generation continues to mature and retire, we expect that there will be a greater demand for a broad range of investment solutions, with an emphasis on income generation and principal protection, and that more of these investors will seek advice from professional financial advisors. We believe these financial advisors will migrate more of their clients’ portfolios to ETFs due to their lower fees, better fit within fee-based models, and their ability to provide access to more diverse market sectors, improve multi-asset class allocation, and be used for different investment strategies, including income generation. Overall, we believe ETFs are well-suited to meet the needs of this large and important group of investors. In addition, since many younger investors and financial advisors have demonstrated a preference for the ETF structure over traditional product structures, we believe that wealth transfers from one generation to another will also have a positive effect on ETF industry growth. • International markets. We believe the growth of ETPs is a global phenomenon. While the U.S. currently represents the vast majority of global ETP assets, many of the same growth drivers in the U.S. market are also taking hold in global markets. Our Industry – Digital Assets We believe that digital assets, tokenization and blockchain technology will help to innovate and evolve financial services from an investments, savings, payments and operational perspective. The digital assets industry has picked up significant momentum 7 Table of Contents among market participants, including asset management firms, fintech firms, banks, broker-dealers and investors, which has spurred unprecedented adoption, growth and innovation. We believe that the benefits of blockchain technology can provide for the best product structures and executions in financial services. We expect that over time, benefits will include the following: • Transparency. Blockchain technology employs mutualized standards, protocols and shared processes, acting as a single shared source of truth for network participants. The increased transparency among financial institutions and market participants may also improve regulatory reporting and monitoring. • Economic benefits. Automated, more efficient processes may lead to reduced operational, transactional and infrastructure costs. • Streamlined processes. Automation and overall operational efficiency increases with the use of blockchain technology. It enables real-time (near instant) settlement, audit and reporting; and it reduces processing times, the potential for error and delay, and the number of steps and intermediaries required to achieve the same levels of confidence in traditional processes, thereby reducing counterparty risks. • New products and potential markets. Blockchain technology can make fractionalized ownership of real-world assets and tokenized economies a reality, with the same, if not better, level of security and scalability found in traditional finance. • Programmable capabilities. Through the creation and execution of smart contracts, governance protocols, compliance, data privacy, customer identification (e.g., KYC/AML), system incentives and features can be programmed or built into the assets themselves. • Scalability. Blockchain technology supports interoperability between private and public blockchains, thereby expanding the global reach and resiliency of transactions. The laws and regulatory frameworks pertaining to digital assets and blockchain technology have evolved and increased in scope, and we expect them to continue to do so. Contemporaneously, there has been heightened regulatory scrutiny of digital asset activities, an increase in cybersecurity incidents leading to the theft or severe loss of assets, and bankruptcies resulting from a variety of factors including poor risk management and oversight controls, speculative or risky behavior, and/or fraud or the misappropriation of customer funds. As a financial innovator seeking to bridge the gap between traditional finance and blockchain-enabled finance, we are embracing a concept we refer to as “responsible DeFi” for our digital assets and blockchain-enabled products and services, which we believe upholds the foundational principles of regulation in this innovative and rapidly evolving space. We are committed to being a trusted provider of innovative products and services guided by proactive engagement and continued collaboration with current and new regulators. Competition in the digital assets industry on a global basis is increasing, ranging from large, established financial incumbents to smaller, early-stage financial technology providers and companies. There are jurisdictions with more stringent and robust regulatory and compliance requirements than others, which could impact the ability of a company to compete in the digital assets industry. Our ability to successfully compete will depend largely on offering innovative products through digital asset exposures, generating strong after-fee performance and track records, embracing regulation, developing strategic partnerships with participants in the digital assets ecosystem, promoting thought leadership and investor education or awareness, building upon our brand and attracting and retaining talented employees. We remain focused on providing the best structures and executions in financial services through digital assets and blockchain technology. Our Competitive Strengths • Well-positioned in large and growing markets. We believe that ETPs are well positioned to grow significantly faster than the asset management industry as a whole, making our focus on ETPs an advantage over traditional asset management firms. We also believe that by leveraging blockchain technology, asset tokenization will be the future and an integral component of blockchain-enabled financial services. Our commitment to our digital assets and blockchain strategy is further demonstrated through the achievement of the following key milestones: (1) the continued development of WisdomTree Prime ™ ; (2) the tokenization of real-world assets like physical gold (i.e., gold tokens) and U.S. dollars (i.e., dollar tokens); (3) the SEC declaring effective the registration of the WisdomTree Short-Term Treasury Digital Fund and nine other digital or blockchain-enabled mutual funds providing a variety of different exposures to fixed income and equity securities while leveraging blockchain technology; and (4) FINRA approving WT Securities to operate as a limited purpose broker-dealer (i.e., mutual fund retailer), which will allow it to facilitate transactions in Digital Funds offered in our blockchain-native digital wallet WisdomTree Prime ™ . We believe that these key milestones, coupled with our ability to further execute on our digital assets strategy, will serve as fundamental building blocks to solidify our position as an early mover, forward-thinking innovator and industry leader in blockchain-enabled financial services. • Strong, seasoned and creative management team. We have built a strong and dedicated senior leadership team. Most of our leadership team has significant ETP or financial services industry experience in fund operations, regulatory and 8 Table of Contents compliance oversight, product development and management or marketing and communications. We also continue to expand our global digital assets team, which is focused on growing existing and developing new investment products, indexes and strategies that provide exposure to digital assets, along with new blockchain-enabled products and services across global markets. Whether through ETPs, digital assets or decentralized finance, we will continue to be a trusted provider of innovative products and services guided by proactive engagement and regulatory collaboration. We believe that our team has demonstrated an ability to innovate as well as recognize and respond to market opportunities and effectively execute our strategy and has a proven track record including developing an ETP sponsor from the ground up despite significant competitive regulatory and operational barriers. • Strong performance. We create our own indexes, most of which weight companies in our equity ETFs by a measure of fundamental value and are rebalanced annually. By contrast, traditional indexes are market capitalization weighted and tend to track the momentum of the market. We also offer actively managed ETFs, as well as ETFs based on third-party indexes. In evaluating the performance of our U.S. listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, over 80% of our U.S. listed AUM covered by Morningstar were in the top two quartiles of peer performance on the very short (1 year) and very long (15 year) timeframes. In addition, over 40% of our U.S. listed AUM is rated 4- or 5-star by Morningstar. • Differentiated product set, powered by innovation and performance . Our products span a variety of traditional and high growth asset classes covering equity, commodity, fixed income, leveraged-and-inverse, currency, cryptocurrency and alternative strategies, and include both passive and actively managed funds. We are also developing next-generation digital products and structures, including Digital Funds and tokenized assets. Our innovations include the following: • the WisdomTree Prime ™ mobile application, our blockchain-native digital wallet, which will serve as a new direct-to-consumer channel positioning us as an early mover and industry leader in blockchain-enabled financial services; • the tokenization of real-world assets like physical gold (i.e., gold tokens) and U.S. dollars (i.e., dollar tokens); • the WisdomTree Short-Term Treasury Digital Fund as well as nine other digital or blockchain-enabled mutual funds that will use blockchain technology to maintain a secondary record of their respective shares on one or more blockchains (e.g., Stellar or Ethereum); • the first gold and oil ETPs via our acquisition of the European exchange-traded commodity, currency and leveraged-and-inverse business of ETFS Capital Limited, or ETFS Capital. Throughout this Report, we refer to the acquired business as ETFS and the acquisition as the ETFS Acquisition; • the first ETF to add bitcoin futures exposure; • the first emerging markets small-cap equity ETF; • the first actively managed currency ETF; • the first ETF to provide investors with access to the Additional Tier 1 Contingent Convertible, or CoCo, bond market; • one of the first international local currency denominated fixed income ETFs; • the first managed futures strategy ETF; • the first currency hedged international equity ETFs in the U.S.; • the first 90/60 balanced ETF; • the first multifactor ETFs incorporating dynamic currency hedging as a factor; and • the first smart beta corporate bond suite. Our product development strategy utilizes our Modern Alpha approach, which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform. Self-indexing is a significant component of this approach. Many of our products are based on proprietary WisdomTree indexes which we believe gives us several advantages. First, it minimizes our third-party index licensing fees, which increases our profitability. Second, because we develop our own intellectual property, we are intimately familiar with our strategies and able to effectively communicate their value proposition in the market with research content and support. Third, it can enhance our speed to market and first mover advantage. Fourth, because these indexes are proprietary to WisdomTree, we may face similar competition, but we never face exact competition. Our expertise in product development combined with our self-indexing capabilities provides a strategic advantage, enabling us to launch 9 Table of Contents innovative products. Building on our heritage of innovation, we are also developing next-generation digital products and structures, including Digital Funds and tokenized assets. • Extensive marketing, research and sales efforts. We have invested significant resources to establish the WisdomTree brand and to promote our products through online and television targeted advertising, social media, as well as through our public relations efforts. Close to 40% of our employees are dedicated to marketing, research and sales. Our sales professionals are the primary points of contact for financial advisors, independent advisory firms and institutional investors who invest in our ETPs. Their efforts are enhanced through value-added services provided by our research and marketing efforts. We have strong relationships with financial advisors and institutional investors and we believe that by strategically aligning these advisor relationships and marketing campaigns with targeted research and sales initiatives and products that align with market sentiment, we differentiate ourselves from our competitors. • Efficient business model with lower risk profile. We have invested heavily in digital tools and data to market and sell our products and in the internal development of our core competencies with respect to product development, marketing, research and sales of our products. We outsource to third parties those services that are not our core competencies or may be resource or risk intensive, such as the portfolio management responsibilities and fund accounting operations of our products. In addition, our licensing costs are moderated since we create our own indexes for most of our ETFs. Our Growth Strategies We are a global financial innovator, offering a well-diversified suite of world-class ETPs, models and solutions, with AUM of $82.0 billion as of December 31, 2022. We are at the forefront of innovation and believe that tokenization and leveraging the utility of blockchain technology is the next evolution in financial services. We are building the foundation that will allow us to lead in this coming evolution. WisdomTree Prime ™ , our blockchain-native digital wallet, will position us to expand our blockchain-enabled financial services product offerings with a new direct-to-consumer channel where spending, saving and investing are united. As we continue to pursue our digital assets strategy, we are embracing a concept we refer to as “responsible DeFi,” which we believe upholds the foundational principles of regulation in this innovative and rapidly evolving space. We believe that our expansion into digital assets will complement our existing core competencies in a holistic manner, diversify our revenue streams and contribute to our growth. Our strategy includes the following: • Launch innovative ETPs that diversify our product offerings and revenues . We have launched many first-to-market ETFs in the U.S. and pioneered alternative weighting and performance methods we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform. Our growth plan includes the following: • target new global product launches filling strategic gaps and seizing tactical opportunities; and • to be a leader in the ESG space. Our ESG offerings include our ex-state-owned methodology which supports our conviction that government-owned companies, particularly in emerging markets, can often have a negative impact on long-term performance. We offer four distinct ex-state-owned approaches in emerging markets. We also offer broad-based U.S. equity strategies through three products that combine the potential performance benefits of our multifactor methodology with ESG attributes to meet investors’ evolving needs. Our AUM in these products totaled $3.1 billion at December 31, 2022, ranking us seventh in the U.S. by ESG assets under management. In 2021, we also launched our ESG model portfolios, our first models with explicit and specific ESG objectives split roughly between the demographic and social shift and environmental pressures families. • Establish ourselves as a leader in digital assets and blockchain-enabled financial services. We continue to make progress and pursue our initiatives in connection with our digital assets business to establish ourselves as a leader in the digital assets industry. Key milestones related to our blockchain-enabled financial services innovation and business development include the following: • continued development of our blockchain-native digital wallet, WisdomTree Prime ™ , which is currently in beta testing with a nationwide rollout targeted in 2023; • we tokenized real-world assets like physical gold (i.e., gold tokens) and U.S. dollars (i.e., dollar tokens); • the SEC declared effective the registration of the WisdomTree Short-Term Treasury Digital Fund and nine other digital or blockchain-enabled mutual funds which provide a variety of different exposures to fixed income and equity securities. Each Digital Fund will use blockchain technology to maintain a secondary record of its shares on one or more blockchains (e.g., Stellar or Ethereum), but will not directly or indirectly invest in any assets that rely on blockchain technology, such as cryptocurrencies; • FINRA approved our limited purpose broker-dealer, WT Securities, to operate as a mutual fund retailer, which will allow it to facilitate transactions in Digital Funds offered in WisdomTree Prime ™ ; 10 Table of Contents • we made various other digital asset and blockchain-related regulatory filings and have applications pending in the U.S. as we position ourselves to become a leader in asset tokenization and digital or blockchain-enabled funds, including through federal and state regulated entities; • we hired a dedicated team across the U.S., U.K, and Ireland focused exclusively on technology, compliance, legal, product, marketing, research and education related to digital assets, DeFi and blockchain technology; • we completed investments in Securrency, Inc., or Securrency, a blockchain-based financial services infrastructure provider for regulated funds and tokenized assets, Fnality International Limited, or Fnality, a company focused on creating a peer-to-peer digital wholesale settlement ecosystem comprised of a consortium of financial institutions, and Onramp Invest, Inc., or Onramp, a technology firm that provides access to digital assets for registered investment advisers; • we developed the RWM WisdomTree Crypto Index, which offers digital assets exposure to separately managed accounts through our collaboration with Ritholtz Wealth Management LLC, Onramp and Gemini Trust Company, LLC; • we launched eight crypto ETPs in Europe, including a bitcoin and ether ETP, crypto asset basket ETPs and other exposures; • the WisdomTree Enhanced Commodity Strategy Fund (GCC) became the first U.S. listed ETF to add bitcoin futures exposure with inclusion of up to 5% bitcoin futures allocation, and the WisdomTree Managed Futures Fund (WTMF) subsequently added bitcoin futures exposure, also with inclusion of up to 5% bitcoin futures allocation; • we launched the WisdomTree +Crypto Model Portfolios to serve as an educational resource for advisors through our collaboration with Onramp and Gemini, as well as supported a new digital asset variable annuity product by Federal Life through the development of our +Crypto Model Portfolios; and • we filed registration statements with the SEC for the WisdomTree Bitcoin Trust and the WisdomTree Ethereum Trust. • Foster deeper client relationships through technology-enabled and research-driven solutions . We believe technology is altering the way financial advisors conduct business. Our award-winning Advisor Solutions program and our Model Adoption Center, or the MAC, provide technology-enabled and research-driven solutions to help financial advisors address technology challenges and grow and scale their businesses. The Advisor Solutions program includes: • access to over 40 model portfolios, which are currently available on a number of platforms, including TD Ameritrade, Merrill Lynch, Morgan Stanley, Envestnet, 55ip and others. Our model portfolios are a natural extension of our research capabilities and provide advisors access to an open-architecture approach, a tenured team and a firm dedicated to innovation and value creation. As part of this initiative, we launched a series of model portfolios in collaboration with Professor Jeremy Siegel; • providing customized portfolio and asset allocation services through our Portfolio & Growth Solutions program to support registered investment advisers and independent broker dealers in building, implementing, and managing their client portfolios while providing strategic guidance for advisors to support their business growth; • access to portfolio construction tools such as our award-winning Digital Portfolio Developer, an enhanced portfolio construction tool that assists financial advisors in analyzing an existing investment portfolio by examining the data and providing alternative portfolio approaches to consider in seeking to improve outcomes based on different measures; • wealth investment research and ETF education; and • practice management resources, including access to thought leaders in behavioral finance, leadership, and transforming wealth management technology. • Deepen relationships with distribution platforms . We maintain relationships with certain distribution platforms that allow commission-free trading of our ETFs. These relationships are beneficial to us as they provide greater marketing privileges and access to the platforms’ advisors. As financial advisors continue to migrate away from mutual funds, we use our expertise in ETFs to build new relationships and educate advisors about the benefits of ETFs. Some of these relationships that exist today are with LPL Financial, BNY Mellon/Pershing, Raymond James, Cetera, Swissquote and others. • Leverage data intelligence to serve and expand investor base and improve sales and marketing effectiveness. We utilize a cognitive customer-focused lead prioritization system which has enhanced our distribution efforts. The system evaluates data across structured and unstructured sources such as historical investment data, market data and investor 11 Table of Contents activity history, extracting behavioral insights, and is designed to enable our sales and marketing teams to optimize outreach to our current and potential investor base. • Selectively pursue acquisitions or other strategic transactions. We may pursue acquisitions or other strategic transactions that will enable us to strengthen our current business, expand and diversify our product offerings, complement our Advisor Solutions program, increase our AUM or enter into new markets. We believe pursuing acquisitions or other strategic transactions is a cost-effective means of growing our business and AUM. Human Capital Resources We compete in the highly competitive asset management industry. Attracting, retaining and motivating highly skilled, and sometimes highly specialized, employees in operations, product development, research, sales and marketing and other positions is crucial to our ability to compete effectively. Our ability to recruit and retain such employees depends on a number of factors, including our corporate culture and work environment, informed by our values and behaviors, talent development and career opportunities and compensation and benefits. We strive to differentiate ourselves in the asset management industry through our sense of community and purpose integrated into our culture, while encouraging a culture where every employee has a voice. Employee Profile At December 31, 2022, we had 273 full-time employees globally, consisting of 173 in the U.S. and 100 in Europe. None of our employees are covered by a collective bargaining agreement and we consider our relations with employees to be good. Diversity, Equity and Inclusion We recognize that a diverse set of perspectives is critical to innovation and have built a diverse and inclusive workforce that includes all genders, races, religions, and ages, as well as those in the disabled community. We actively seek candidates from different backgrounds and outside traditional fields and reinforce our commitment to diversity through organizational policies, such as mandating fairness and equality for all employees and creating performance appraisal systems that are non-discriminatory. Our Women’s Initiative Network, or WIN, is an employee-led network designed to provide opportunities and support from all genders for women at WisdomTree; career development and professional training opportunities; and female empowerment and leadership within the organization. Since its inception in 2019, WIN has held several successful global events, including panel discussions on women in the workforce featuring notable guest speakers; interactive seminars on topics including negotiation skills; workshops and coaching sessions to enhance confidence to speak up; and various roundtable forums, informal coffee catch-ups and in-person and virtual social gatherings to promote connectivity and increase engagement. WIN also produces weekly internal “spotlight” newsletters to increase visibility and raise the profile of our female employees and in 2022 expanded its efforts to promote their external visibility, leading to being shortlisted by Women in Asset Management USA for DEI Initiative of the Year, Employer of the Year, Advocate of the Year and Next Generation Leader of the Year. We pride ourselves on the diversity of our employee base globally, inclusive of gender, race, ethnicity, age, gender identity, gender expression and sexual orientation, and seek to continuously strengthen our commitment to diversity, equity and inclusion, or DEI. In 2020, after engaging with a DEI-focused external consulting firm, we conducted an employee survey and several focus groups. The output from these exercises was incorporated into a DEI strategic plan and resulted in the formation of an employee-led DEI Council in 2021. The objectives of this plan include driving clarity and accountability around our commitment to fostering an inclusive culture where all employees feel empowered to do their best work; building trust across differences to ensure employees feel a sense of community and belonging; providing clear paths for growth and development opportunities; and elevating diverse voices and perspectives. The DEI Council is comprised of senior leaders and employees and provides oversight and guidance in connection with the implementation of programs contemplated by the DEI strategic plan. The DEI Council seeks to foster a diverse, equitable and inclusive workplace culture in support of WisdomTree’s DEI vision. In 2022, the DEI Council continued to assess diversity across the firm through employee surveys and launched a DEI workshop series aimed at giving employees practical tools to use in building and fostering an inclusive culture. Employee Wellness, Health and Safety The wellbeing of our employees is a primary focus. In response to the COVID-19 pandemic, we established a committee that led a coordinated strategy and acted quickly, implementing significant changes across the organization to protect our people. Our entire global workforce transitioned seamlessly and worked remotely and successfully throughout the pandemic. We continue to provide frequent communications to keep our employees informed about health, safety and remote working logistics and offer expanded health, wellness and other benefits. For example, we support employees with their information technology needs, provide a monthly stipend to cover remote work-related business expenses and provide guidance for managers to ensure that employees remain connected and maintain physical, mental and emotional wellbeing. We also continue to offer numerous wellness programs including meditation and yoga classes, health webinars, a weekly wellness newsletter and access to mental health professionals and other resources. We also offer flexible paid time-off and sick leave policies to provide employees additional flexibility. As the virtual work environment during the pandemic led to efficiencies, increased transparency and further collaboration throughout our business, we continue to maintain a “remote first” philosophy. This means that time in the office is not prescribed, 12 Table of Contents and individuals and teams are empowered to determine how they work best, based on their role, while remaining accountable for achieving individual and team outcomes. This decision was made after soliciting feedback from our employees, a significant number of whom were highly supportive of these plans. In keeping with “remote first,” we terminated the lease for our principal executive offices in New York and London and now maintain a smaller office footprint to better align with the number of employees expected to collaborate in person on any given day, while providing a space for employees to work and socialize. As the safety and security of our employees who choose to work in our office space is of critical importance, we have selected office buildings with robust security procedures, fire safety and sanitation and health practices. Compliance, Training and Development We comply with all applicable government laws, rules and regulations and it is the responsibility of each employee to adhere to the standards and restrictions imposed by those laws, rules and regulations. All new employees attend a compliance training session with a compliance officer, and thereafter, employees are required to attend firmwide annual compliance training and to complete compliance certifications annually and in some instances, quarterly. As we believe that our employees are our greatest asset, we recognize the importance of investing in their continued development. We provide a variety of opportunities for our employees to build new skills and further their career development. These include job-specific training courses, virtual executive lunches and webinars hosted by various departments to gain a holistic view of the Company. We also support employees continuing education, including through our educational assistance program. In addition, we invest in our current and future leaders through leadership development courses and coaching, and through our WIN mentorship program, we connect WIN members of all genders with leaders who can help them achieve their career development goals. We also hold monthly town halls to inform our employees of business developments and job openings for those seeking career development opportunities. Employee Engagement We believe engaging our employees is key to fostering new ideas and driving commitment and productivity. We communicate frequently and transparently with our employees through a variety of communication methods, including an annual global virtual offsite, monthly town halls and firmwide weekly emails championing the team’s work. We also seek feedback from our employees through annual engagement surveys and follow-up pulse surveys on various topics. We also believe it is important to celebrate employee and Company accomplishments. In 2022, we celebrated our third annual “Team Alpha” Awards to mark significant events and successes and to recognize employees who led those successes while exhibiting extraordinary teamwork and demonstrating strong character. Over 100 nominations were submitted and narrowed down by a selection committee. The winners received a modest incentive compensation award, the opportunity to donate to a charity of their choice and to recognize other employees who assisted them. The success of our employee engagement efforts is demonstrated by our employee retention rate of approximately 88% in 2022. We also achieved overall positive results from our 2022 global employee engagement survey, with a 96% participation rate. Additionally, in the U.S., we were named a 2022 Best Places to Work in Money Management by Pension & Investments for the third consecutive year and six years total and were selected as the top firm within the category for managers with 100-499 employees. We were also named Best WorkPlace for medium-sized companies in the U.K. for a third consecutive year and a 2022 Best Workplace for Women for medium-sized companies by Great Place to Work. Compensation and Benefits We are committed to rewarding and supporting our employees in order to continue to attract and retain top talent. Our incentive compensation program has been designed to reward our employees for their individual performance as well as the Company’s performance and includes various quantitative metrics and qualitative results that incentivize growth. We believe a key factor in our success has been and continues to be fostering an entrepreneurial culture where our employees act and think like our owners. As such, we believe that equity awards are an important part of our employees’ overall compensation package and that incentivizing our employees with equity aligns the interests of our employees with our stockholders. We also offer a wide array of benefits including generous healthcare coverage, paid vacation, parental, sabbatical and sick leave, life insurance, short- and long-term disability benefits and a 401(k) plan with a matching contribution of up to 50% of eligible employee contributions. Our Product Categories U.S. Equity We offer equity products that provide access to the securities of large, mid and small-cap companies located in the U.S., as well as particular market sectors and styles. Our U.S. Equity products track our own indexes, the majority of which are fundamentally weighted as opposed to market capitalization weighted indexes, which assign more weight to stocks with the highest market capitalizations. These fundamentally weighted indexes focus on securities of companies that pay regular cash dividends or on securities of companies that have generated positive cumulative earnings over a certain period. We believe weighting equity 13 Table of Contents markets by dividends and income, rather than by market capitalization, can provide investors with better risk-adjusted returns over longer term periods in core equity exposures. Total AUM of our U.S. Equity products was $24.1 billion at December 31, 2022. Commodity & Currency We offer products in Europe with exposure to gold and other precious metals and commodities such as silver and platinum, oil and energy, agriculture and broad basket commodities. Our currency products provide investors with exposure to developed and emerging markets currencies, as well as exposures to foreign currencies relative to the U.S. dollar. Total AUM of our Commodity & Currency products was $22.1 billion at December 31, 2022. Fixed Income Our Fixed Income products seek to enhance income potential within the fixed income universe. We offer a suite of rising rate bond products based on leading fixed income benchmarks we license from third parties. We also launched the industry’s first smart beta corporate bond suite. Other product offerings include those that seek to track a yield-enhanced index of U.S. investment grade bonds and international fixed income products which are denominated in either local or U.S. currencies. Total AUM of our Fixed Income products was $15.3 billion at December 31, 2022. International Developed Market Equity Our International Developed Market Equity products offer a variety of strategies including currency hedged and dynamic currency hedged products, exposures to large, mid and small-cap companies in these markets and multifactor strategies. Total AUM of our International Developed Market Equity products was $10.2 billion at December 31, 2022. Emerging Market Equity Our Emerging Market Equity products provide access to exposure of large, mid and small-cap companies located in Taiwan, China, India, Russia, South Africa, South Korea and other emerging markets regions. These products also track our own indexes, which are fundamentally weighted focusing on securities of companies that pay regular cash dividends or that have generated positive cumulative earnings over a certain period. Total AUM of our Emerging Market Equity products was $8.1 billion at December 31, 2022. Leveraged & Inverse We offer leveraged products which seek to achieve a return that is a multiple of the performance of the underlying index and inverse products that seek to deliver the opposite of the performance in the index or benchmark they track. Strategies span across equity, commodity, government bond and currency exposures. Total AUM of our Leveraged & Inverse products was $1.8 billion at December 31, 2022. Alternatives Our Alternative products include the industry’s first managed futures strategy ETF and a global real return ETF. We also offer a dynamic long/short U.S. equity ETF, a dynamic bearish U.S. equity ETF and a collateralized put write strategy ETF on the S&P 500 index. We also intend to explore additional alternative strategy products in the future. Total AUM of our Alternative products was $0.3 billion at December 31, 2022. Cryptocurrency Our cryptocurrency ETPs in Europe provide investors with a simple, secure and cost-efficient way to gain exposure to the price of cryptocurrencies, while utilizing the best of traditional financial infrastructure and product structuring. We offer exposures to bitcoin, ether, crypto asset baskets and other cryptocurrency exposures. Total AUM of our cryptocurrency products was $0.1 billion at December 31, 2022. Our Sales, Marketing and Research Efforts Sales We distribute our ETPs through all major channels within the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers. Our primary sales efforts are not directed towards the retail segment but rather are directed towards the financial or investment adviser who acts as the intermediary between the end-client and us. We do not pay commissions, nor do we offer 12b-1 fees to financial advisors to use or recommend the use of our products. We have developed an extensive network and relationships with financial advisors and we believe that our ETPs and related research are well structured to meet their needs and those of their clients. We have taken steps to enhance and form new relationships through our Advisor Solutions program, including providing customized portfolio and asset allocation services through our Portfolio & Growth Solutions program to support registered investment advisers and independent broker dealers in building, implementing and managing their client portfolios while providing strategic guidance for advisors to support their 14 Table of Contents business growth. Our Advisor Solutions program also provides technology-enabled and research-driven solutions to help financial advisors grow and scale their businesses. In addition, senior and academic advisors of ours participate as keynote speakers in various industry and WisdomTree hosted conferences and events. Our sales professionals act in a consultative role to provide financial advisors with value-added services. We seek to consistently grow our network of financial advisors and we opportunistically seek to introduce new products and services that best deliver our investment strategies to investors through these distribution channels. We have our own team of 65 sales professionals globally as of December 31, 2022. In addition, we have agreements with third parties to serve as the external marketing agents for our products in Latin America and Israel, as well as with select brokerage firms and independent broker-dealers to allow certain of our products to trade commission free on their platforms in exchange for a percentage of our advisory fee revenues from certain AUM. We believe these arrangements expand our distribution capabilities in a cost-effective manner and we may continue to enter into such arrangements in the future. Marketing Our marketing efforts are focused on the following objectives: increase our global brand awareness, leverage a robust data-driven digital sales experience to generate new clients and drive inflows to our products and model portfolios and retain existing clients, with a focus on cross-selling additional WisdomTree ETPs. We also anticipate launching marketing campaigns to drive awareness and user adoption for WisdomTree Prime ™ and to position ourselves to become a leader in asset tokenization and blockchain-enabled funds. We pursue these objectives utilizing the following strategies: • Targeted advertising. We create highly targeted multi-media advertising campaigns limited to established core financial media. For example, our television advertising to promote our ETPs runs exclusively on the cable networks CNBC, Fox Business and Bloomberg. Television advertising will also be utilized to promote WisdomTree Prime TM . Also, our digital advertising runs on many investing and ETF-specific web sites, such as www.etftrends.com and www.etfdatabase.com , using targeted dynamic and personalized ad messaging. We recently introduced non-linear TV advertising that leverages the same targeted segments of users who use streaming devices. In Europe, we filter the targeting of promotions by both region and language, focusing heavily on professional investors. • Media relations. We have a full-time global corporate communications and public relations team that has established relationships with major financial media outlets. We utilize these relationships to help increase global awareness of the WisdomTree ETPs, the ETP industry in general in the U.S. and Europe and our digital assets efforts. Several members of our management team and multiple members of our research team are frequent market commentators and conference panelists. • Database Messaging Strategy. We have a database of financial advisors to which we regularly market through a series of messages across channels (email, display, site) that are triggered based on user interest and predictive analytics, on-demand research presentations, ETP-specific or educational events and presentations, and market commentary from our senior investment strategy adviser, Professor Jeremy Siegel. Additionally, in the U.S., we communicate to our retail database about new product launches and provide ETF education. • Social media. We have implemented a social media strategy that allows us to connect directly with financial advisors and investors by offering timely access to our research material and more general market commentary. Our social media strategy allows us to continually enhance our brand reputation of expertise and thought leadership in the ETP industry. For example, we have an established presence on LinkedIn, Twitter, Instagram, Reddit and YouTube, and our blog content is syndicated across multiple business-oriented websites. We also plan to leverage the strength and reach of our existing brand, in addition to utilizing a highly focused “test, learn, iterate” paid and social media marketing strategy, to drive awareness and user adoption for WisdomTree Prime ™ . • Sales support. We create comprehensive materials to support our sales process, including whitepapers, research reports, webinars, blogs, podcasts, videos and performance data for our products. Our marketing automation system connects seamlessly to our database of financial advisors to provide the sales team with additional insights about their clients. We will continue to evolve our marketing and communication efforts in response to changes in the ETP industry, market conditions, marketing trends and our evolving strategy around digital assets. Research and Chief Investment Office Our research team and chief investment office, or CIO, has four core functions: product development and oversight, investment research, model portfolio management and sales support across equities, fixed income, alternatives, crypto and asset allocation portfolios. In its index and active product development and oversight role, the group is responsible for creating the investment methodologies and overseeing the maintenance of indexes and active strategies. The team also provides a variety of investment research around these indexes and markets and manages a series of model portfolios that incorporate WisdomTree and 15 Table of Contents third-party products for various investment platforms, including WisdomTree Prime ™ . Our research is typically academic-type research to support our products, including white papers on the strategies underlying our indexes and ETPs, investment insights on current market trends, and types of investment strategies that drive long-term performance. We distribute our research and insights through our sales professionals, online through our website and blog, targeted emails to financial advisors, or through financial media or social media outlets. Finally, the team supports our sales professionals in meetings as market experts and through custom analysis on client portfolio holdings. In addition, we consult with our senior advisers, including Professor Jeremy Siegel, on product development ideas, model collaboration and market commentaries. Product Development We are focused on driving continued growth through innovative product development including through our Modern Alpha approach and our digital assets offerings. Modern Alpha combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective products that are built to perform. Due to our proprietary index development capabilities and a strategic focus on product development, we have demonstrated an ability to launch innovative and differentiated ETPs. Building on our heritage of innovation, we are also developing next-generation digital products and structures, including Digital Funds and tokenized assets. When developing new products, we seek to position ourselves as first to market, offering improvement in structure or strategy relative to an incumbent product or offering some other key distinction relative to an incumbent product. In short, we want to add choice in the market and seek to introduce thoughtful investment solutions. Lastly, when launching new products, we seek to expand and diversify our overall product line. Competition The asset management industry is highly competitive and we face substantial competition in virtually all aspects of our business. Factors affecting our business include fees for our products, our offerings and investment performance, brand recognition, business reputation, quality of service and the continuity of our financial advisor and platform relationships. We compete directly with other ETP sponsors and mutual fund companies and indirectly against other investment management firms, insurance companies, banks, brokerage firms and other financial institutions. Many of the firms we compete with are subsidiaries of large diversified financial companies and many others are much larger in terms of AUM, years in operations and revenues and, accordingly, have much larger sales organizations and budgets. In addition, these larger competitors may attract business through means that are not available to us, including retail bank offices, investment banking, insurance agencies and broker-dealers. ETPs are now available for virtually every asset class including equities, fixed income, commodities, alternative strategies, leveraged-and-inverse, currencies and cryptocurrencies (with greater access to markets outside of the U.S.). Existing players have broadened their suite of products offering strategies that are, in some cases, similar to ours and large traditional asset managers are also launching ETPs, some with similar strategies as well. There remain substantial areas for sponsors to continue to innovate, including with respect to cryptocurrency, liquid alternative, thematic and ESG strategies. Price competition exists in not only commoditized product categories such as traditional, market capitalization weighted index exposures and commodities, but also in non-market capitalization weighted or factor-based exposures and commodities. Fee reductions by certain of our competitors has been a trend over the last few years and continues to persist and many of our competitors are well positioned to benefit from this trend. Certain larger competitors are able to offer products at lower price points or otherwise as loss leaders due to other revenue sources available within such competitors that are currently unavailable to us. Newer players have also been entering the ETP industry and frequently seek to differentiate by offering ETPs at a lower price point. Funds are being offered with fees of 20 basis points or less, which have attracted approximately 78% of the net flows globally during the last three years. However, while these low-cost products have accumulated a significant amount of AUM recently, we estimate that these same funds represent only approximately 33% of global revenues. Being a first mover, or one of the first providers of ETPs in a particular asset class, can be a significant advantage, as the first ETP in a category to attract scale in AUM and trading liquidity is generally viewed as the most attractive product. We believe that our early launch of products in a number of asset classes or strategies, including fundamental weighting and currency hedging, along with commodities including gold, certain fixed income, alternative and thematic categories and our ESG offerings, positions us well to maintain our standing as one of the leaders of the ETP industry. Additionally, we believe that our affiliated indexing or “self-indexing” model, as well as our more recent active ETFs, enable us to launch proprietary products that do not have direct competition and are positioned to generate alpha versus benchmarks. As investors increasingly become more comfortable with the product structure, we believe there will be a greater focus on after-fee performance rather than using ETPs primarily as low-cost market access vehicles. While we have selectively lowered fee rates on certain products that have yet to attain scale, and there is no assurance that we will not lower fee rates on certain products in the future, our strategy continues to include launching new funds in the same category with a differentiated exposure at a lower fee rate, rather than reducing fees on existing products with a significant amount of AUM, long performance track records, and secondary market liquidity, which continue to remain competitively priced for the value provided, among other factors. We generally believe we are well positioned from a product pricing perspective. 16 Table of Contents We also have been positioning ourselves to expand beyond our existing ETP business by leveraging blockchain technology, digital assets and principles of DeFi to deliver transparency, choice and inclusivity to customers and consumers around the world. Our products are expanding to include asset tokenization and digital or blockchain-enabled mutual funds, leveraging federal and state regulated entities. In 2022, the SEC declared effective the registration of the WisdomTree Short-Term Treasury Digital Fund and nine other Digital Funds, which provide a variety of different exposures to fixed income and equity securities. FINRA also approved our limited purpose broker-dealer, WT Securities, to operate as a mutual fund retailer, which will allow it to facilitate transactions in Digital Funds offered in WisdomTree Prime ™ . Further, we have tokenized real-world assets like physical gold (i.e., gold tokens) and U.S. dollars (i.e., dollar tokens). These products are being developed with the ability to be recorded and/or transferred on multiple public and/or permissioned blockchains with interoperability between blockchains. We believe this expansion will complement our core competencies in a holistic manner, diversify our revenue streams and contribute to our growth. Competition in the digital assets industry on a global basis is increasing, ranging from large, established financial incumbents to smaller, early-stage financial technology providers and companies. There are jurisdictions with more stringent and robust regulatory and compliance requirements than others which could impact the ability of a company to compete in the digital assets industry. We are embracing a concept we refer to as “responsible DeFi” for our anticipated and expanded products and services which we believe upholds the foundational principles of regulation in this innovative and quickly evolving space. We remain committed to being a trusted provider of innovative products and services guided by proactive engagement and continued collaboration with current and new regulators. Our ability to successfully compete will depend largely on offering innovative products through traditional ETPs and digital asset exposures (and more broadly in blockchain-enabled finance, including savings and payments), having strong internal controls and risk management infrastructure to enable customer trust, generating strong after-fee performance and track records, embracing regulation, developing distribution relationships, promoting thought leadership and a differentiated solutions program, building upon our brand and attracting and retaining talented sales professionals and other employees. Regulatory Framework of the ETP Industry and Digital Assets Business Introduction ETPs Not all ETPs are ETFs. ETFs are a distinct type of security with features that are different than other ETPs. ETFs are open-end investment companies or unit investment trusts regulated in the U.S. by the Investment Company Act of 1940, or the Investment Company Act. This regulatory structure is designed to provide investor protection within a pooled investment product. For example, the Investment Company Act requires that at least 40% of the Trustees for each ETF must not be affiliated persons of the fund’s investment manager, or Independent Trustees. If the ETF seeks to rely on certain rules under the Investment Company Act, a majority of the Trustees for that ETF must be Independent Trustees. ETFs generally operate under regulations that allow them to operate within the ETF structure, while ETFs also operate under regulations that prohibit affiliated transactions, are subject to standard pricing and valuation rules and have mandated compliance programs. ETPs can take a number of forms in addition to ETFs, including exchange-traded notes, grantor trusts or limited partnerships. In the U.S. market, a key factor differentiating ETFs, grantor trusts and limited partnerships from exchange-traded notes is that the former hold assets underlying the ETP. Exchange traded notes, on the other hand, are debt instruments issued by the exchange-traded note sponsor. Also, each of these structures has implications for taxes, liquidity, tracking error and credit risk. Digital Assets As we continue to make progress and pursue various initiatives in connection with our digital assets business, we believe it is necessary and important to do so in compliance with applicable laws and regulations. As a result, we are actively engaged or plan to be engaged with a variety of U.S. federal and state regulators (e.g., the SEC, FINRA, New York Department of Financial Services (NYDFS) and other state regulators) to secure, as necessary, the appropriate regulatory, registration and/or licensing approvals for various business initiatives and operations, including but not limited to: a New York state-chartered limited purpose trust company; money services and money transmitter business; broker-dealer; investment adviser; and investment funds. As we seek to expand globally, similar approvals and/or reliance on exemptions will be required in applicable foreign markets, which may also involve approvals specific to a digital asset or related business. If we are successful in securing the appropriate regulatory, registration and/or licensing approvals, or otherwise relying on, seeking or confirming exemptions therefrom, for these different initiatives in connection with our digital assets business, we will be subject to a myriad of complex and evolving global policy frameworks and associated regulatory requirements that we would need to comply with, or otherwise be exempt from, in seeking to ensure that our digital asset products and services are successfully brought to different markets in a compliant manner. We remain committed to being a trusted provider of innovative products and services guided by proactive engagement and regulatory collaboration. 17 Table of Contents U.S. Regulation The investment management industry is subject to extensive regulation and virtually all aspects of our business are subject to various federal and state laws and regulations. These laws and regulations are primarily intended to protect investment advisory clients and shareholders of registered investment companies. These laws generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the conduct of our business and to impose sanctions for failure to comply with these laws and regulations. Further, such laws and regulations provide the basis for examination, inquiry, investigation, enforcement action and/or litigation that may also result in significant costs to us. We are primarily subject to the following laws and regulations, among others. The costs of complying with such laws and regulations have increased and will continue to contribute to the costs of doing business: • The Investment Advisers Act of 1940 (Investment Advisers Act). The SEC is the federal agency generally responsible for administering the U.S. federal securities laws. WisdomTree Asset Management, Inc., or WT Asset Management, and WisdomTree Digital Management, Inc., or WT Digital Management, two of our subsidiaries, are registered as investment advisers under the Investment Advisers Act and, as such, are regulated by the SEC. The Investment Advisers Act requires registered investment advisers to comply with numerous and broad obligations, including, among others, recordkeeping requirements, operational procedures, and registration, reporting and disclosure obligations. • The Investment Company Act of 1940 (Investment Company Act). All of our Digital Funds and U.S. listed ETFs are registered with the SEC pursuant to the Investment Company Act. These products must comply with the applicable requirements of the Investment Company Act and other regulations, such as those related to publicly offering and listing shares, as well as requirements of Rule 6c-11, or the ETF Rule, including, among others, requirements relating to operations, fees charged, sales, accounting, recordkeeping, disclosure, transparency and governance. In addition, the SEC recently finalized new rules and/or rule amendments related to valuation, fund of fund investing, derivatives and marketing/advertising, with compliance deadlines throughout 2022, and the SEC is expected to continue to propose new and/or revised provisions under the Investment Company Act that will impact current and future digital fund and ETF operations and/or investments. • Broker-Dealer Regulations. WT Securities is a FINRA member firm. As a limited purpose broker-dealer, WT Securities will operate as a mutual fund retailer for the Digital Funds offered through WisdomTree Prime ™ . This business is separate from other WisdomTree subsidiaries operating as Digital Fund and ETF sponsors in the U.S. which are not required to be registered with the SEC as broker-dealers under the Securities Exchange Act of 1934, as amended, or Exchange Act. However, many of our employees, including all of our salespersons, are licensed with FINRA and are registered either as associated persons of WT Securities or the distributor of the WisdomTree Digital Funds and U.S. listed ETFs and, as such, are subject to the regulations of FINRA that relate to licensing, continuing education requirements and sales practices. FINRA also regulates the content of our marketing and sales material. • Federal Money Services Business and State Money Transmission Laws. WisdomTree Digital Movement, Inc. is operating as a money services business registered with the Financial Crimes Enforcement Network, or FinCEN, and is seeking state money transmitter licenses to operate a platform for the purchase, sale and exchange of digital assets, while also providing digital wallet services through WisdomTree Prime ™ to facilitate such activity. Navigating state regulations across the U.S. provides compliance challenges and significant costs as regulations and expectations differ between states, with different states seeking to achieve different objectives with their regulations, from consumer protection to preventing money laundering. In addition, licensure requirements are quickly evolving (including regulators not permitting certain activities related to digital assets pursuant to such licenses), with the associated timeframes for licensure increasing and licensure being further complicated by recent market events and bankruptcies of firms in the digital assets space. • Internal Revenue Code. The WisdomTree Trust generally has obligations with respect to the qualification of the registered investment companies for pass-through tax treatment under the Internal Revenue Code. In September 2021, draft tax legislation was released that would directly impact the tax treatment of ETFs. The proposed legislation would eliminate ETFs’ chief tax advantage by repealing Section 852(b)(6) of the Internal Revenue Code, which allows ETFs to redeem shares in-kind without exposing long-term investors to capital gains on any individual security in the underlying ETF structure. We believe that ETFs are an important tool used by retail investors striving to build financial security, as well as younger investors who are participating in the financial markets for the first time. The ETF creation and redemption process ensures accurate index tracking for the benefit of all shareholders and it is the most cost-effective and tax-efficient way to achieve this, directly benefiting the end investor. We believe that ETFs have proven to be a successful investment structure that should be protected. If eliminated, ETFs would lose a valuable benefit associated with the structure; however, overall industry growth should not be materially affected due to the other inherent benefits of ETFs – transparency and liquidity. 18 Table of Contents • U.S. Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA). Regulations adopted by the CFTC have required WT Asset Management to become a member of the NFA and register as a commodity pool operator for a select number of our ETFs. • Exchange Listing Requirements. Each WisdomTree U.S. listed ETF is listed on a secondary market (each, an Exchange), including NYSE Arca, the NASDAQ Market and the CBOE Exchange, and accordingly is subject to the listing requirements of these Exchanges. Any new WisdomTree U.S. listed ETF will seek listing on an Exchange and also will need to meet continued Exchange listing requirements, which generally align with requirements of the ETF Rule. However, the SEC or an Exchange may ultimately determine not to allow the issuance of potential new WisdomTree U.S. listed ETFs or may require strategy modifications as part of the registration and/or listing process. In addition, our common stock is listed on the New York Stock Exchange and we are therefore also subject to its rules including corporate governance listing standards, as well as federal and state securities laws. • FINRA Rules. FINRA rules and guidance may affect how WisdomTree U.S. listed ETFs are sold by member firms. Although we currently do not offer so-called leveraged ETFs in the U.S., which may include within their holdings derivative instruments such as options, futures or swaps to obtain leveraged exposures. FINRA guidance, the recently effective SEC Rule 18f-4, or the Derivatives Rule, and/or other future rules or regulations may influence how member firms effect sales of certain WisdomTree U.S. listed ETFs, such as our currency ETFs, or how such ETFs operate, which also use some forms of derivatives, including forward currency contracts and swaps, our international hedged equity ETFs, which use currency forwards, and our rising rates bond ETFs and alternative strategy ETFs, which use futures or options. International Regulation Our operations outside the U.S. are subject to the laws and regulations of various non-U.S. jurisdictions and non-U.S. regulatory agencies and bodies. As we have expanded our international presence, a number of our subsidiaries and international operations have become subject to regulatory systems, in various jurisdictions, comparable to those covering our operations in the U.S. Regulators in these non-U.S. jurisdictions may have broad authority with respect to the regulation of financial services including, among other things, the authority to grant or cancel required licenses or registrations. Jersey-Domiciled Issuers (Managed by WisdomTree Management Jersey Limited) One of our subsidiaries, WisdomTree Management Jersey Limited, or ManJer, is a Jersey based management company providing investment and other management services to several Jersey-domiciled issuers, or ManJer Issuers, of exchange-traded commodities, or ETCs, each of which was established as a special purpose vehicle to issue exchange-traded securities. All ETCs are listed and marketed across the European Union, or EU, under Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (as amended), or the Prospectus Regulation. Since January 4, 2021, the Central Bank of Ireland, or Central Bank, approves all ETC Base Prospectuses (with the exception of WisdomTree Issuer X Limited’s prospectus which is approved by the Swedish Financial Supervisory Authority) as meeting the requirements imposed under EU law pursuant to the Prospectus Regulation. Such approval relates only to those securities to be admitted to trading on a regulated market for the purpose of Markets in Financial Instruments Directive (recast) – Directive 2014/65/EU of the European Parliament and the Council, or MiFID II, and/or which are to be offered to the public in any European Economic Area, or EEA, Member State. All ETC prospectuses (except WisdomTree Issuer X Limited’s prospectus) are also approved by the Financial Conduct Authority, or FCA, as U.K. Listing Authority, as competent authority pursuant to the U.K. version of Regulation (EU) No 2017/1129 of the European Parliament and the Council of 14 June 2017 on the form and content of such prospectuses and repealing Directive 2003/71/EC which is part of U.K. law by virtue of the European Union (Withdrawal) Act 2018, or the U.K. Prospectus Regulation. Each prospectus (except WisdomTree Issuer X Limited’s prospectus) is prepared, and a copy is sent to the Jersey Financial Services Commission, or JFSC, in accordance with the Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012. Each ManJer Issuer (other than WisdomTree Issuer X Limited) has obtained a certificate under the Collective Investment Funds (Jersey) Law 1988 (as amended), to enable it to undertake its functions in relation to its ETCs. At the request of the relevant ManJer Issuer, the Central Bank has notified the approval of the Base Prospectus in accordance with the Prospectus Regulation to other EU listing authorities, including Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Poland, Spain and Sweden, by providing them with certificates of approval attesting that the Base Prospectus has been prepared in accordance with the Prospectus Regulation. Each issuer may request the Central Bank to provide competent authorities in other EEA Member States with such certificates for the purposes of making a public offer in such Member States and/or for admission to trading of all or any securities on a regulated market. WisdomTree Issuer X Limited’s program for the issuance of WisdomTree digital securities does not constitute a collective investment fund for the purpose of the Collective Investment Funds (Jersey) Law 1988 (as amended) as it satisfies the requirements of Article 2 of the Collective Investments Funds (Restriction of Scope) (Jersey) Order 2000. A copy of WisdomTree Issuer X Limited’s prospectus has been delivered to the Registrar of Companies in Jersey in accordance with Article 5 of the Companies (General Provisions) (Jersey) Order 2002, and the Registrar has consented to its circulation. The JFSC has consented under Article 4 of the Control of Borrowing (Jersey) Order 1958 19 Table of Contents to the issue of the WisdomTree digital securities by WisdomTree Issuer X Limited. The prospectus of WisdomTree Issuer X Limited is also recognized by the Swiss Prospectus Office. The ManJer Issuers are primarily subject to the following legislation and regulatory requirements: • The Companies (Jersey) Law 1991. Each ManJer Issuer is incorporated as a public limited liability company under the Companies (Jersey) Law 1991. Therefore, the ManJer Issuers are required to comply with various obligations under the Companies (Jersey) Law 1991 such as, but not limited to, convening general meetings, keeping proper books and records and filing financial statements. • The Foreign Account Tax Compliance Act, or FATCA , which was passed as part of the Hiring Incentives to Restore Employment (HIRE) Act, generally requires that foreign financial institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments. The HIRE Act also contained legislation requiring U.S. persons to report, depending on the value, their foreign financial accounts and foreign assets. ETCs benefit from the so called “listing exemption” and Jersey local authorities have determined that for companies which can benefit from such exemption the filing of a nil report is optional. • The Common Reporting Standards, or CRS , were developed by the Organization for Economic Cooperation and Development and is a global reporting standard for the automatic exchange of information. The ManJer Issuers will need to conduct FATCA style due diligence and annual local reporting in relation to financial accounts held directly and indirectly by residents of those jurisdictions with which the Foreign Financial Institutions (FFIs) jurisdiction of residence has signed an Intergovernmental Agreement (IGA) to implement the CRS. Unlike FATCA, there is no clear listing exemption available under the CRS so the ManJer Issuers are required to conduct full due diligence to identify such accounts and report on them on an annual basis to their local tax authorities, at least in respect of the certificated interests and primary market issuances. However, Jersey tax authorities have applied less onerous reporting obligations to interests such as ETCs that are regularly traded on an established securities market and are held through CREST, the U.K. based central securities depository. The ManJer Issuers are also primarily subject to the following legislation and regulatory requirements: • The Collective Investment Funds (Jersey) Law 1988. Each ManJer Issuer (other than WisdomTree Issuer X Limited) is a collective investment fund and therefore required to comply with the obligations under the Collective Investment Funds (Jersey) Law 1988 and the Code of Practice for Certified Funds. • The Prospectus Regulation. The Base Prospectus of each ManJer Issuer has been drafted, and any offer of ETCs in any EEA Member State that has implemented the Prospectus Regulation is made in compliance with the Prospectus Regulation and any relevant implementing measure in such Member States. • Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, known as the European Market Infrastructure Regulation (“EMIR”). EMIR, which became effective on August 16, 2012, provides for certain over-the-counter, or OTC, derivative contracts to be submitted to central clearing and imposes margin posting and other risk mitigation techniques, reporting and record keeping requirements. The clearing obligations under EMIR are still under discussion, and currently there are no mandatory clearing obligations in relation to equity, FX or commodity derivatives. The clearing obligation only applies to EU-based financial counterparties (defined as those authorized under MiFID, CRR, AIFMD, UCITS or insurance regulations) or those non-financial entities that have a rolling three-month notional exposure above a certain amount (between €1 and €3 billion, depending on asset class), which means that the ManJer Issuers are not directly subject to these obligations, but could indirectly be subject to them by virtue of their interaction with EU-based financial counterparties. In terms of reporting obligations, being non-EU entities, the ManJer Issuers are only indirectly subject to such obligations when they interact with their EU-based financial counter-parties. Each ManJer Issuer has adhered to the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by the International Swaps and Derivatives Association, Inc. • Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse (the “Regulation”) and Directive 2014/57/EU of the European Parliament and of the Council on criminal sanctions for market abuse (the “Directive” and, together with the Regulation, “MAD”). Obligations imposed on the relevant ManJer Issuer and distributor under MAD, which became effective on July 3, 2016, include the requirement to publish inside information in a public and timely manner, to prepare and maintain a list of insiders and to refrain from market manipulation. • Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (“BMR”). Supervised EU entities which issue financial instruments that reference a benchmark are required to comply with applicable obligations 20 Table of Contents as set out under the BMR. The BMR was published on June 30, 2016 and the majority of the provisions became effective on January 1, 2018. The ManJer Issuers are non-EU entities and as a result, BMR application is very limited, although in some circumstances a few residual obligations could be deemed to be applicable because the ETCs are marketed across Europe. • Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (“PRIIPS”). PRIIPs became effective on January 1, 2018 and applies to investment product manufacturers and distributors. Under PRIIPs, manufacturers need to provide a key information document (KIDs) to investors. The intention of KIDs is to improve transparency for investors on the products and enhance investor protection. The product manufacturer is responsible for drafting the KID and for its content. All ETCs are currently subject to PRIIPs and KIDs have been produced since January 1, 2018. • MiFID II. MiFID II covers a wide range of areas that affect the relevant issuer and distributor, such as product governance, a definition of complex products which captures all physical and synthetic ETCs and the production of a European MiFID template, or an EMT, to facilitate the dissemination of relevant information to the markets and distributors in relation to each financial product. • Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012. (“SFTR”). Counterparties to securities financing transactions must report the transaction to trade repositories. The SFTR introduces a reporting requirement for transactions, and a disclosure requirement to investors with a requirement for prior consent. It also designates that financial instruments used for re-hypothecation are transferred to an account in the name of the other counterparty. Since the ManJer Issuers are based in non-EU jurisdictions, obligations are only indirectly applicable to them, but a certain level of interaction with EU counterparties is required to comply with some of these requirements. WisdomTree Issuer X Limited is also primarily subject to the following legislation and regulatory requirements: • The Control of Borrowing (Jersey) Order 1958. WisdomTree Issuer X Limited is required to comply with the obligations under the Control of Borrowing (Jersey) Order 1958 in respect of its issue of the WisdomTree digital securities. • The Companies (General Provisions) (Jersey) Order 2002. WisdomTree Issuer X Limited is required to comply with the obligations under the Companies (General Provisions) (Jersey) Order 2002 in respect of its circulation of the WisdomTree digital securities prospectus. Irish-Domiciled Issuer of UCITS ETFs (Managed by WisdomTree Management Limited) The investment management industry in Ireland is subject to both Irish domestic law and EU law. The Central Bank of Ireland, or the Central Bank, is responsible for the authorization and supervision of collective investment schemes, or CIS, in Ireland. CIS’s are also commonly known as funds/schemes. There are two main categories of funds authorized by the Central Bank, Undertakings for Collective Investment in Transferable Securities (UCITS) and funds that are not UCITS known as alternative investment funds. ETFs form part of the Irish and European regulatory frameworks that govern UCITS, with ETFs having been the subject of specific consideration at the European level which is then repeated and/or interpreted by Irish regulators and the Central Bank in regulations and related guidance issued by the Central Bank. One of our subsidiaries, WisdomTree Management Limited, is an Ireland based management company authorized in Ireland providing collective portfolio management services to WisdomTree Issuer ICAV, or WTICAV, and WisdomTree UCITS ETFs. The WisdomTree UCITS ETFs are issued by WTICAV. WTICAV, a non-consolidated third party, is an Irish-collective-asset-management vehicle, or ICAV, organized in Ireland and is authorized as a UCITS by the Central Bank. All UCITS have their basis in EU legislation and once authorized in one EEA Member State, may be marketed throughout the EU, without further authorization. This is described as an EU passport. The WisdomTree UCITS ETFs have been registered with the FCA under the Temporary Permissions Regime and thus continue to be available to U.K. investors. WTICAV is established and operated as an ICAV with segregated liability between its sub-funds. The sub-funds are segregated portfolios, each with their own investment objective and policies and assets. Each sub-fund has a separate approval from the Central Bank, and each is structured as an ETF. Each sub-fund tracks a different index. The index must comply with regulatory criteria that govern, among others, the eligibility and diversification of its constituents, and the availability of information on the index such as the frequency of calculation of the index, the index’s transparency, its methodology and frequency of calculation. Each sub-fund is listed on a European stock exchange and has shares admitted to trading on the London Stock Exchange and, accordingly, is subject to the listing requirements of those exchanges. WTICAV is primarily subject to the following legislation and regulatory requirements: • European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (as amended) (“UCITS Regulations”). The UCITS Regulations, which transpose Council Directive 2009/65/EC, 21 Table of Contents Commission Directive 2010/43/EC and Commission Directive 2010/44/EC into Irish law, became effective on July 1, 2011. UCITS established in Ireland are authorized under the UCITS Regulations. • Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2019 (“Central Bank UCITS Regulations”). The Central Bank UCITS Regulations were adopted in May 2019 and, together with the UCITS Regulations, any guidance produced by the Central Bank, and the Central Bank forms, form the basis for all the requirements that the Central Bank imposes on UCITS, UCITS management companies and depositaries of UCITS. • Central Bank Guidance. The Central Bank also has produced guidance that provides direction on issues relating to the funds industry, certain of which set forth conditions not contained in the UCITS Regulations or the Central Bank Regulations with which UCITS must conform. • The Irish Collective Asset-Management Vehicle Act 2015 (“ICAV Act”). WTICAV is registered as an ICAV under the ICAV Act. Therefore, WTICAV is required to comply with various obligations under the ICAV Act such as, but not limited to, keeping proper books and records. The segregation of liability between sub-funds means there cannot be, as a matter of Irish law, cross-contamination of liability between sub-funds. Therefore, the insolvency of one sub-fund cannot affect another sub-fund. • EMIR. EMIR provides for OTC derivative contracts to be submitted to central clearing and imposes, inter alia, margin posting and other risk mitigation techniques, reporting and record keeping requirements. WTICAV uses OTC derivatives instruments to hedge the currency risk of some of its sub-funds, which are subject to EMIR. WTICAV has adhered to the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by the International Swaps and Derivatives Association, Inc. The Central Bank has been designated as the competent authority for EMIR. • BMR. The BMR is directly applicable law across the EU and applies to certain “administrators,” “contributors” and “users” of benchmarks with the aim of reducing the risk of benchmark manipulation and promoting confidence in their integrity and that of the financial markets which they support. Since WTICAV issues financial instruments that reference a benchmark, it will be required to comply with applicable obligations as set out under the BMR. In addition, non-EU administrators of benchmarks are required to satisfy a number of requirements to enable the benchmarks they provide to be used in the EU. To ensure investor protection, the BMR provides equivalence, recognition and endorsement conditions under which third country benchmarks may be used by supervised entities in the EU. Since we control the provision of benchmarks, we are required to comply with applicable obligations within the timeframes set out under the BMR. • Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (“PRIIPS”). As above, WisdomTree’s ETCs have been subject to PRIIPS since January 1, 2018. On January 1, 2023, PRIIPS also began to apply to UCITS. WTICAV has been producing and publishing these KIDs for share classes of the sub-funds of the ICAV since January 1, 2023. • Regulation on Disclosures (EU/2019/2088) (“SFDR”) and the EU Taxonomy Regulation (2020/852) (“EU Taxonomy”). SFDR requires WisdomTree Management Limited, as a UCITS management company, to disclose in a consistent and harmonized manner how environmental, social and governance, or ESG, factors are adopted in its decision-making process. SFDR also requires certain pre-contractual and periodic disclosure requirements for in scope WTICAV sub-funds, such as UCITS financial products. Level 1 of SFDR requirements applied from March 1, 2021 and Level 2 of the SFDR requirements applied from December 1, 2022. The EU Taxonomy Regulation amends the disclosure requirements in place under SFDR. The EU Taxonomy disclosures for the economically sustainable objectives of climate change mitigation and climate change adaptation were applicable from January 1, 2022, while the requirement for disclosures for the remaining objectives applied from January 1, 2023. The WTICAV Prospectus, as well as supplements and product pages of the WTICAV sub-funds in scope of SFDR and EU Taxonomy, have been updated to reflect the respective regulatory requirements. • Regulation (EU) 2019/1156 on the cross-border distribution framework (“CBDF”). The CBDF amend the UCITS Directive to increase the harmonization of cross-border marketing between both (a) the UCITS regime and (b) different practices adopted by EU member states and came into effect on August 2, 2021. The CBDF eliminated the need for WTICAV to have local paying agents within EU member states the sub-funds passported into, but introduced rules around marketing communications, pre-marketing notifications and the discontinuation of marketing. • Regulatory technical standards on settlement discipline (“CSDR”). CSDR introduced measures to prevent settlement failures, with settlement failures resulting in penalty charges applied by the Central Securities Depositaries to failing parties. Since most WTICAV sub-funds employ physical replication using equities and bonds, trades in these equities that take place within the EU come into scope of CSDR. This regulation came into force on February 1, 2022. 22 Table of Contents Irish-Domiciled Issuer (Managed by WisdomTree Multi Asset Management Limited) One of our subsidiaries, WisdomTree Multi Asset Management Limited, is a Jersey based management company providing investment and other management services to WisdomTree Multi Asset Issuer PLC, or WMAI, in respect of the ETPs issued by WMAI. WMAI, a non-consolidated third party, is a public limited company incorporated in the laws of Ireland. It was established as a special purpose vehicle for the purposes of issuing collateralized exchange-traded securities, or ETP Securities, under the Collateralized ETP Securities Programme described in its Base Prospectus. WMAI is a ‘ qualifying company ’ within the meaning of section 110 of the Taxes Consolidation Act 1997 (as amended), of Ireland. WMAI is not authorized or regulated by the Central Bank by virtue of issuing ETPs. The Central Bank, as competent authority under the Prospectus Regulation, has approved the Base Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Regulation. Such approval relates only to ETP Securities which are to be admitted to trading on a regulated market for the purpose of MiFID II and/or which are to be offered to the public in any EEA Member State. The Base Prospectus also has been approved by the FCA as competent authority pursuant to the U.K. version of Regulation (EU) No 2017/1129 of the European Parliament and the Council of 14 June 2017 on the form and content of such prospectuses and repealing Directive 2003/71/EC which is part of U.K. law by virtue of the U.K. Prospectus Regulation. At the request of WMAI, the Central Bank has notified the approval of the Base Prospectus in accordance with the Prospectus Regulation to the Commissione Nazionale per le Societá e la Borsa (the Italian financial supervisory authority), the Bundesanstalt für Finanzdienstleistungsaufsicht (the German Federal Financial Supervisory Authority), the Financial Market Authority of Austria, the Commission de Surveillance du Secteur Financier (the financial regulator in Luxembourg), the Finanstilsynet (the Norwegian financial supervisory authority), the Autorité des Services et Marchés Financiers (the Belgian Financial Services and Markets Authority), the Finanstilsynet (the Danish Financial Supervisory Authority), the Finanssivalvonta (the Finnish Financial Supervisory Authority), the Autorité des Marchés Financiers (the French Authority for the Financial Markets), the Autoriteit Financiële Markten (the Netherlands Authority for the Financial Markets), the Komisja Nadzoru Finansowego (the Polish Financial Supervisory Authority), the Comisión Nacional del Mercado de Valores (the Securities Market Commission in Spain) and Finansinspektionen (the Swedish Financial Supervisory Authority) by providing them, inter alia , with certificates of approval attesting that the Base Prospectus has been prepared in accordance with the Prospectus Regulation. WMAI may request the Central Bank to provide competent authorities in other EEA Member States with such certificates whether for the purposes of making a public offer in such Member States or for admission to trading of all or any ETP Securities on a regulated market therein or both. WMAI is primarily subject to the following legislation and regulatory requirements: • The Companies Act. WMAI is incorporated as a public limited liability company under the Companies Act. Therefore, WMAI is required to comply with various obligations under the Companies Act such as, but not limited to, convening general meetings, keeping proper books and records and filing financial statements. • The Prospectus Regulation. The Base Prospectus has been drafted, and any offer of ETP Securities in any EEA Member State that has implemented the Prospectus Regulation is made in compliance with the Prospectus Regulation and any relevant implementing measure in such Member States. • EMIR. WMAI hedges its payment obligations in respect of the ETP Securities by entering into swap transactions with swap providers, which are subject to EMIR. The Central Bank has been designated as the competent authority for EMIR and, to assess compliance with EMIR, requests that WMAI submits annually an EMIR Regulatory Return. • BMR. Since WMAI issues financial instruments that reference a benchmark, it also will be required to comply with applicable obligations under the BMR. • MAD. MAD has a direct effect in Ireland and strengthens the legal framework underpinning the function of detecting, sanctioning and deterring market abuse. Broadly, MAD applies to any financial instrument admitted to, or for which a request for admission has been made to, trading on a regulated market in at least one member state of the EU or in an EEA Member State. Obligations imposed on WMAI under MAD include the requirement to publish inside information in a public and timely manner, to draw up and maintain a list of insiders and to refrain from market manipulation. • CSDR. As above, CSDR introduced measures to prevent settlement failures, with settlement failures resulting in penalty charges applied by the Central Securities Depositaries to failing parties. Intellectual Property We regard our name, WisdomTree, as material to our business and have registered the WisdomTree name and logo design as a service mark with the U.S. Patent and Trademark Office and in various foreign jurisdictions. We also have registered Modern Alpha as a service mark with the U.S. Patent and Trademark Office and in various foreign jurisdictions and have applied for trademark registration of the WisdomTree Prime ™ name and logo design. Many of our index-based equity ETFs are based on our own indexes and we do not license them from, nor do we pay licensing fees to, third parties for these indexes. We do, however, license third-party indexes for certain of our fixed income, currency and alternative ETFs. 23 Table of Contents On March 6, 2012, the U.S. Patent and Trademark Office issued to us our patent on Financial Instrument Selection and Weighting System and Method, which is embodied in our dividend weighted equity indexes. We currently do not rely upon our patent for a competitive advantage. Available Information Company Website and Public Filings Our website is located at www.wisdomtree.com , and our investor relations website is located at https://ir.wisdomtree.com . We make available, free of charge through our investor relations website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to Sections 13(a) or Section 15(d) of the Exchange Act as soon as reasonably practicable after they have been electronically filed with, or furnished to, the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding the Company at www.sec.gov . We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website. Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases as part of our investor relations website. Further corporate governance information, including board committee charters and our code of business conduct and ethics, is also available on our investor relations website under the heading “Governance.” The contents of our websites are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.