Morgan Stanley to sell bitcoin ETFs to clients

Morgan Stanley may soon allow its 15,000 brokers to recommend bitcoin ETFs to their clients, as reported by AdvisorHub.

The Wall Street firm permitted purchases of bitcoin ETFs following their approval earlier this year but only if clients requested them. Now, Morgan Stanley plans to let brokers actively suggest these ETFs to clients.

The shift reflects growing demand for these ETFs, which let investors gain from bitcoin without direct exposure. “We’re going to make sure that we’re very careful about it…we are going to make sure everybody has access to it. We just want to do it in a controlled way,” a Morgan Stanley executive told AdvisorHub.

In January, the SEC approved 11 spot bitcoin ETFs from companies including BlackRock, Fidelity, and Invesco. These approvals led to significant initial investment inflows into bitcoin, though these have since slowed, with BlackRock’s ETF experiencing no new inflows on a recent Wednesday.

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. According to SoSoValue, U.S.-traded spot bitcoin ETFs hold over $53.6 billion in assets under management, with significant inflows still being recorded.

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).