Morgan Stanley Becomes First American Banking Giant To Offer Spot Bitcoin ETFs To Wealthy Clients

Morgan Stanley, the largest wealth manager in the United States, is now allowing its wealth advisers to offer spot Bitcoin (BTC) exchange-traded funds (ETFs) to high-net-worth clients starting this Wednesday, according to a report.

The move was in response to increasing demand from clients for crypto-related products. Notably, winning over the American multinational investment bank is a historic milestone for the crypto industry.

Morgan Stanley Opens The Door To BTC ETFs

Morgan Stanley has become the first among major Wall Street banks to allow its 15,000+ financial advisers to actively promote Bitcoin exchange-traded funds (ETFs) to eligible clients, CNBC reported on Friday, citing anonymous sources privy to the matter.

The swarm of cyber hornets just grew by 15,000 Morgan Stanley financial advisors. #Bitcoin

— Eric Weiss (@Eric_BIGfund) August 2, 2024

BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) are the initial offerings. Starting Aug. 7, Morgan Stanley advisers can start advising eligible clients to buy red-hot shares of IBIT and FBTC. Other spot crypto ETFs, including the newborn spot Ethereum (ETH) ETFs, have not yet been approved.

The historic greenlighting of 11 U.S.-listed spot Bitcoin ETFs stirred hopes the products would attract deep-pocketed financial institutions to crypto. However, Wall Street giants like Morgan Stanley usually have long compliance and review procedures to follow before they authorize funds to be offered to their clients.

Morgan Stanley announced in April that it was considering policy changes to enable its brokers to solicit purchases for Bitcoin ETFs. CNBC reported that the latest move was made in response to the soaring demand for Bitcoin ETFs. Suffice it to say that such a move could substantially increase demand for these BTC-based investment vehicles.

“This move is in response to client demand and our desire to keep pace with the evolving digital asset marketplace,” CNBC said, quoting an individual familiar with Morgan’s policies.

However, the mega-bank will only let clients with a net worth of at least $1.5 million purchase IBIT and FBTC shares. They must also have a high-risk tolerance and a desire for speculative investments. Additionally, Morgan Stanley will limit these investments to taxable brokerage accounts, which are not available for retirement accounts. Sources told CNBC that the bank will monitor clients’ crypto holdings to ensure they are not excessively exposed to the fast-growing asset class.

Why Morgan Stanley’s Offering Matters

This development is particularly remarkable given the cryptocurrency industry’s rocky history, including huge market fluctuations and the implosion of renowned exchanges like FTX.

Despite harsh criticism from financial bigwigs such as JPMorgan Chase CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett, Bitcoin continues to garner popularity in mainstream finance.

Meanwhile, the price of Bitcoin careened Friday as a stock market crash intensified on Wall Street, and the tech-heavy Nasdaq slipped into a market drawdown after a weaker-than-expected July U.S. jobs report. BTC was trading for $61,810 as of press time, down 4.60% over the past 24 hours.