Morgan Stanley will allow its financial advisors to offer Bitcoin exchange-traded funds (ETFs) to certain clients, the first among major Wall Street banks, according to CNBC.
The Wall Street firm permitted purchases of bitcoin ETFs following their approval earlier this year but only if clients requested them. Now, Morgan Stanley lets brokers actively pitch these ETFs to clients.
Starting Wednesday, Morgan Stanley’s 15,000 financial advisors can solicit eligible clients to buy shares of BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund.
Only clients with a net worth of at least $1.5 million, a high-risk tolerance, and an interest in speculative investments will be eligible for Bitcoin ETF solicitation. These investments will be available for taxable brokerage accounts, not retirement accounts.
The bank plans to monitor clients’ crypto holdings to ensure they do not have excessive exposure to the volatile asset class.
– Advertisement –
Historically, major financial advisory firms, also known as wirehouses, such as Bank of America, JPMorgan Chase, and Wells Fargo, have been reluctant to adopt spot crypto ETFs. Morgan Stanley’s acceptance, managing trillions of dollars, is seen as a pivotal moment for the market.
The shift reflects growing demand for these ETFs, which let investors gain from bitcoin without direct exposure.
In January, the SEC approved 11 spot bitcoin ETFs from companies including BlackRock, Fidelity, and Invesco. These approvals led to strong initial investment inflows into bitcoin, though these have since slowed.
Morgan Stanley’s new policy could fuel interest and investment flows into bitcoin ETFs. The firm is setting up procedures for these recommended purchases, focusing on risk tolerance and trading limits, though no specific timeframe for these changes has been provided.
Following their January introduction, major firms like Morgan Stanley, Merrill Lynch, and Wells Fargo have offered bitcoin ETFs on an unsolicited basis.
Morgan Stanley is a leader in the alternative investment and private market space with over $150 billion in assets under management. In 2021, it became the first major U.S. bank to offer bitcoin fund access to its wealthy clients. The bank confirmed in its first-quarter earnings call that it was offering exposure to bitcoin through external crypto funds, such as those offered by Galaxy Digital and NYDIG.
The addition of bitcoin ETFs to its platform aligns with Morgan Stanley’s strategic focus on wealth management, which is less dependent on capital markets and offers less volatile revenue sources. The company’s expansion efforts, including the acquisitions of Eaton Vance, E*Trade Financial, and Shareworks, reflect this focus. The wealth management segment recorded a compound annual growth rate (CAGR) of 17.4% in total client assets over the past five years (2018-2023).
