Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Measurements [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The fair value of financial instruments is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. ASC 820, Fair Value Measurement, establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 – Instruments whose significant drivers are unobservable.

The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The tables below summarize the categorization of the Company’s assets and liabilities measured at fair value. During the three and nine months ended September 30, 2024 and 2023, there were no transfers between Levels 2 and 3.

	September 30, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Recurring fair value measurements:
Cash equivalents	$	58,371	$	58,371	$	—	$	—
Financial instruments owned, at fair value:
ETFs		54,677		54,677		—		—
Pass-through GSEs		7,332		—		7,332		—
Other assets—seed capital (WisdomTree Digital Funds):
U.S. treasuries		5,364		—		5,364		—
Equities		8,022		8,022		—		—
Fixed income		1,946		1,033		913		—
Total	$	135,712	$	122,103	$	13,609	$	—
Non-recurring fair value measurements:
Fnality International Limited—Series B-1 Preference Shares(1)	$	8,288	$	—	$	—	$	8,288

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⁽¹⁾  Fair value determined on June 17, 2024. Not included above are prospective changes in value due to fluctuations in the British pound to U.S. dollar exchange rate.

	December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Recurring fair value measurements:
Cash equivalents	$	50,226	$	50,226	$	—	$	—
Financial instruments owned, at fair value:
ETFs		35,181		35,181		—		—
Pass-through GSEs		10,240		—		10,240		—
Other assets—seed capital (WisdomTree Digital Funds):
U.S. treasuries		5,007		—		5,007		—
Equities		6,337		6,337		—		—
Fixed income		1,957		1,008		949		—
Total	$	108,948	$	92,752	$	16,196	$	—
Non-recurring fair value measurements:
Fnality International Limited—Series B-1 Preference Shares(1)		9,684		—		—		9,684
Other investments(2)		—		—		—		—
Total	$	9,684	$	—	$	—	$	9,684

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(1)	Fair value determined on October 31, 2023.
(2)	Fair value determined on September 30, 2023.

Recurring Fair Value Measurements – Methodology

Cash Equivalents (Note 3) – These financial assets represent cash invested in highly liquid investments with original maturities of less than 90 days. These investments are valued at par, which approximates fair value, and are classified as Level 1 in the fair value hierarchy.

Financial instruments owned (Note 5) – Financial instruments owned are investments in ETFs, pass-through GSEs, U.S. treasuries, equities and fixed income. ETFs and equities are generally traded in active, quoted and highly liquid markets and are therefore classified as Level 1 in the fair value hierarchy. Pricing of U.S. treasuries, pass-through GSEs and fixed income includes consideration given to date of issuance, collateral characteristics and market assumptions related to yields, credit risk and timing of prepayments and may be classified as either Level 1 or Level 2.