Morgan Stanley (NYSE:MS) is reportedly considering the addition of spot bitcoin exchange-traded fund (ETF) products to its brokerage platform, as indicated by sources familiar with the matter, as per a CoinDesk article.
The firm has been evaluating the potential to offer spot bitcoin ETFs to clients following the Securities and Exchange Commission’s (SEC) approval of their introduction in January. Currently, 10 spot bitcoin ETFs are trading in the United States, with Grayscale’s GBTC, BlackRock’s IBIT, and Fidelity’s FBTC holding significant assets.
The introduction of bitcoin ETF offerings is expected to expand the investor base for bitcoin, as investing in ETFs is generally more accessible than purchasing bitcoin directly. While substantial investments have already been made in these products, the availability of bitcoin ETFs through prominent registered investment advisor networks and broker-dealer platforms of firms like Merrill Lynch, Morgan Stanley, and Wells Fargo is anticipated to further boost investments in these products.
Morgan Stanley, recognized as a leader in the alternative investment and private market space with over $150 billion in assets under management, was among the first major U.S. banks to provide access to Bitcoin funds for its affluent clients in 2021. During its first-quarter earnings call in April 2021, the company confirmed that it was offering exposure to Bitcoin to wealth management clients through external crypto funds, including those offered by Galaxy Digital and NYDIG.
This move aligns with the company’s strategic focus on the wealth management segment, which is less reliant on capital markets and features less volatile revenue sources. Morgan Stanley’s strategic expansion efforts, including acquisitions of Eaton Vance, E*Trade Financial, and Shareworks, reflect this direction. Furthermore, the wealth management segment has shown impressive growth, with total client assets experiencing a compound annual growth rate (CAGR) of 17.4% over the past five years (2018-2023).
Despite potential near-term volatility stemming from the challenging operating environment, the trend is expected to improve as conditions become more favorable. For 2024, the wealth management segment’s total client assets are projected to grow by 3.7% year-over-year.
Morgan Stanley’s shares have gained 1.1% over the past six months, compared to the industry’s growth rate of 12.3%.
In January, reports surfaced indicating that The Goldman Sachs Group, Inc. (NYSE:GS) was being considered as the authorized participant (“AP”) for the spot bitcoin ETF, which Grayscale and BlackRock Inc. (NYSE:BLK) have been planning to launch. As an AP for the spot bitcoin ETF, Goldman would be responsible for tracking the ETF share price with underlying assets. Additionally, BlackRock became the first asset manager to file for the spot Bitcoin ETF in June 2023, setting the stage for similar filings by other asset managers.
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