Morgan Stanley has introduced the first Bitcoin exchange-traded product (ETP) issued by a U.S. bank, signaling a significant move into the digital asset market. Amy Oldenburg, the bank’s head of digital asset strategy, discussed this development at the Bitcoin Conference in Las Vegas.
Oldenburg emphasized that while there is increasing client interest in digital assets, several regulatory and operational hurdles must be addressed before U.S. banks can hold Bitcoin on their balance sheets. She noted that the Federal Reserve and Basel regulations are among the key challenges that need to be navigated.
Despite these obstacles, Morgan Stanley is actively expanding its digital asset offerings. The newly launched MSBT product attracted over $100 million in its first six days, primarily from self-directed clients, indicating a strong demand for Bitcoin investment options.
Oldenburg pointed out the disparity between what financial advisors are currently offering and what clients are seeking. While Morgan Stanley suggests a 2%-4% allocation in Bitcoin for clients, the slow uptake among advisors is largely due to a lack of education on digital assets. She highlighted that 80% of ETP exposure on the bank’s wealth platform comes from self-directed investments.
In addition to the ETP launch, Morgan Stanley is pursuing a digital trust charter from the Office of the Comptroller of the Currency (OCC). This would enable the bank to directly custody cryptocurrencies and facilitate spot trading on its wealth management platform. Currently, the MSBT product utilizes Coinbase and BNY Mellon as custodians.
Oldenburg’s insights come at a time when other major financial institutions are also recognizing the potential of digital assets. For instance, BNY Mellon’s CEO, Robin Vince, recently remarked that large banks will play a crucial role in bridging traditional finance and cryptocurrency, although regulatory clarity is essential for broader adoption.
The appetite for regulated Bitcoin products is evident, with BlackRock’s IBIT ETF rapidly accumulating over $61 billion in assets since its launch in January 2024, marking it as the fastest-growing ETF in history.
Morgan Stanley has launched the first bank-issued Bitcoin ETP, highlighting growing client demand for digital assets. However, regulatory challenges remain before banks can fully integrate Bitcoin into their balance sheets.