Wall Street giant Morgan Stanley is seeking to launch three cryptocurrency ETFs, following in the footsteps of BlackRock’s US$71 billion IBIT ETF.
This week, it has submitted regulatory filings with the US Securities and Exchange Commission to launch Bitcoin, Solana and Ethereum ETFs.
The firm, which manages more than US$1.8 trillion ($2.6 trillion), is the first major US bank to take this step as it looks to capitalise on growing institutional demand for cryptocurrency.
In SEC filings seen by InvestorDaily, these name the Morgan Stanley Bitcoin Trust and Morgan Stanley Solana Trust filed on 6 January and the Morgan Stanley Ethereum Trust filed on 7 January.
The proposed Ethereum and Solana ETFs would distribute staking rewards to shareholders.
Morgan Stanley was also the first major US wealth management business to allow its advisers to recommend bitcoin ETFs to select clients in 2024, following a policy change.
The move into ETFs follows the launch of the iShares Bitcoin Trust ETF (IBIT) which has gone on to become BlackRock’s most profitable product line with US$71 billion in assets under management.
Commenting on the Morgan Stanley move, Jeff Park, CIO at ProCap BTC and an advisor at Bitwise Asset Management, said Morgan Stanley’s plans show the market is “much bigger” than even crypto professionals had anticipated.
“This signals that despite IBIT being the fastest ETF in history to reach US$80 billion in AUM, there is enough untapped interest as viably researched and ascertained through Morgan Stanley’s proprietary wealth channels that they are willing to bet that a branded product has commercial viability,” he said in a post on X on January 6.
Park added that it signals Bitcoin is “socially” important, just as much as it is “financially” important as a product to offer customers.
“Consider the fact that for being “digital gold” there are virtually no branded gold ETFs in existence, yet for Bitcoin there is. This is because every asset manager knows that having a Bitcoin ETF communicates that they are forward thinking, young, and a little edgy that allows targeting the most challenging investor cohort that everyone wants to reach: UHNW Independent Investors,” he said.
Park believes the ETF serves as a reputation and positioning tool, signalling credibility, innovation, and seriousness in the asset class. At its core, he says it is a defensive move against platform disintermediation and fee leakage.
“By launching their own BTC ETF after IBIT already consolidated liquidity, Morgan Stanley is implicitly acknowledging a hard truth: DISTRIBUTION owns the customer, not product superiority … While this launch looks irrational through a pure AUM lens, also totally inevitable through a platform economics lens,” he said.
Meanwhile, this week also saw 15,000 Bank of America wealth management advisers officially begin recommending clients may allocate up to 4 per cent of their portfolios to cryptocurrency. The move, which had been flagged in December, will see its advisers cover four bitcoin ETFs and assess their suitability for a 1-4 per cent holding for its wealth management clients.
