Morgan Stanley has filed with U.S. regulators to launch a spot bitcoin exchange-traded fund, marking the primary time a significant U.S. financial institution has sought approval to situation an ETF tied on to the worth of bitcoin.
The submitting, submitted to the Securities and Alternate Fee, proposes the Morgan Stanley Bitcoin Belief, an exchange-traded fund designed to trace the worth of bitcoin, web of charges and bills.
If authorised, the fund would maintain bitcoin straight somewhat than counting on futures, derivatives, or leverage, in line with the registration assertion.
The transfer locations Morgan Stanley alongside asset managers which have dominated the bitcoin ETF market since regulators authorised the primary U.S. spot merchandise in early 2024.
These funds now handle greater than $120 billion in belongings, representing a significant share of bitcoin’s complete market worth. A lot of that progress has flowed into bitcoin-only merchandise from companies akin to BlackRock and Constancy.
Morgan Stanley’s entry indicators a shift by massive banks from distributing third-party crypto merchandise towards issuing their very own.
Till not too long ago, U.S. banks largely limited their role to custody and brokerage companies, citing regulatory uncertainty and danger controls. That stance has begun to alter as federal businesses clarified how banks can interact with digital belongings.
In December, the Workplace of the Comptroller of the Forex said banks might act as intermediaries for crypto transactions, narrowing the divide between conventional finance and digital markets. The SEC has additionally adjusted itemizing requirements for spot crypto ETFs, smoothing the approval path for brand new issuers.
Morgan Stanley steps deeper into bitcoin
The proposed bitcoin belief could be sponsored by Morgan Stanley Funding Administration. Shares could be created and redeemed in massive blocks by approved individuals, both in money or in type.
The fund’s web asset worth could be calculated every day utilizing a pricing benchmark based mostly on exercise throughout main spot bitcoin exchanges. Retail buyers would commerce shares on a secondary market by customary brokerage accounts.
For Morgan Stanley, the submitting builds on steps taken final yr to increase crypto entry throughout its wealth administration enterprise. In October, the bank widened eligibility for crypto investments to incorporate all shoppers and account sorts.
By providing a proprietary bitcoin ETF, the agency can combine the product straight into shopper portfolios and retain administration charges that may in any other case go to rival issuers.
The transfer additionally displays the economics of the bitcoin ETF market. Spot bitcoin funds have turn out to be a few of the fastest-growing merchandise within the U.S. ETF trade, with regular inflows even in periods of value volatility. BlackRock’s bitcoin ETF emerged as one of many agency’s prime income contributors inside its first yr.
Morgan Stanley additionally filed paperwork for the same fund tied to Solana, however bitcoin stays the core focus of institutional demand. Most belongings in U.S. crypto ETFs are concentrated in bitcoin merchandise, whereas funds linked to different tokens have drawn restricted capital.
