Morgan Stanley’s Bold Move: Offering Bitcoin ETFs to Select Clients

In an unprecedented move for a major Wall Street bank, Morgan Stanley has announced that it will soon allow its financial advisors to pitch bitcoin ETFs to eligible clients. This groundbreaking step, set to begin on August 7, marks the first time a major bank has embraced such a strategy.

Starting Wednesday, Morgan Stanley’s extensive network of approximately 15,000 financial advisors will be able to recommend shares of two prominent bitcoin exchange-traded funds (ETFs): BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund.

This decision highlights Morgan Stanley’s commitment to staying ahead in the evolving digital assets market. The approval of 11 spot bitcoin ETFs by the U.S. Securities and Exchange Commission in January signaled a new era, making bitcoin investments more accessible, cost-effective, and easily tradable.

Despite the ups and downs of the crypto market, including the notorious collapse of FTX and criticism from financial heavyweights like JPMorgan Chase CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett, bitcoin’s resilience has kept it in the spotlight. Consequently, major Wall Street firms have been cautious, with giants like Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo still restricting their advisors from pitching these products, only processing trades if clients specifically request them.

Morgan Stanley’s decision to pivot is a response to growing client demand and the shifting landscape of digital assets. However, the bank is proceeding with caution. Only clients with a net worth of at least $1.5 million, a high-risk tolerance, and an interest in speculative investments will qualify for these bitcoin ETF offerings. Moreover, these investments are limited to taxable brokerage accounts.

To manage the risks associated with the volatile crypto market, Morgan Stanley will closely monitor clients’ crypto holdings to prevent excessive exposure. The bank has narrowed its approved crypto investments to the two bitcoin ETFs from BlackRock and Fidelity, having phased out private funds from Galaxy and FS NYDIG earlier this year.

Looking ahead, Morgan Stanley is observing the development of newly approved ether ETFs but has yet to decide on offering access to these products.