Morgan Stanley Taps Coinbase and BNY for Bitcoin ETF Custody

Morgan Stanley has revised its filing for the Morgan Stanley Bitcoin Trust, naming new service providers for the proposed fund. The amendment to its Form S-1 identifies Coinbase Custody Trust Company and The Bank of New York Mellon as bitcoin custodians. 

The update marks a concrete step in the bank’s plan to launch a spot bitcoin exchange-traded product. Consequently, the filing clarifies how the firm intends to structure operations and safeguard assets.

The trust plans to list on NYSE Arca and track the CoinDesk Bitcoin Benchmark 4PM NY Settlement Rate. Moreover, the vehicle will hold bitcoin directly and will not use leverage or derivatives.

The structure mirrors other spot bitcoin ETFs that entered the U.S. market in 2024. However, Morgan Stanley’s direct branding on the product stands out within its ETF lineup.

Custody, Administration, and Prime Brokerage Roles

The amended registration statement assigns multiple responsibilities to BNY. Additionally, BNY will act as administrator, transfer agent, and cash custodian for the trust. Coinbase will serve as prime broker alongside its custody role. Hence, the trust relies on two established institutions to manage trading flows and asset security.

Authorized participants will create and redeem shares in cash or in-kind. The trust will buy or sell bitcoin to match those transactions. Moreover, any trading costs tied to cash redemptions will fall on the authorized participants. The structure aims to reduce tracking error and maintain operational clarity.

Coinbase already acts as primary custodian for most U.S. spot bitcoin ETFs. Fidelity remains a notable exception in the current market. Significantly, large asset managers have leaned on established crypto custodians to meet regulatory and operational standards.

Expanding Digital Asset Ambitions

Morgan Stanley manages roughly 20 exchange-traded funds, yet only two carry its brand name. Therefore, the bitcoin trust would represent a visible expansion of its ETF identity. The bank ranks sixth in the United States by total assets. However, it has maintained limited direct exposure to digital assets until recently.

Earlier this year, the firm appointed Amy Oldenburg to lead an expanded digital asset strategy. Additionally, Morgan Stanley filed a separate registration statement for a proposed Solana trust. That filing has not yet received a similar amendment.

Spot bitcoin ETFs have attracted significant inflows since their debut. For example, BlackRock’s iShares Bitcoin Trust reached several asset milestones after listing in January 2024. Consequently, traditional financial institutions continue to evaluate direct participation in crypto-linked investment products.