Morgan Stanley has filed with U.S. regulators to launch a spot bitcoin exchange-traded fund, marking the primary time a serious U.S. financial institution has sought approval to problem 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, internet of charges and bills.
If accepted, the fund would maintain bitcoin straight slightly than counting on futures, derivatives, or leverage, in keeping with the registration assertion.
The transfer locations Morgan Stanley alongside asset managers which have dominated the bitcoin ETF market since regulators accepted 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 whole market worth. A lot of that progress has flowed into bitcoin-only merchandise from corporations comparable to BlackRock and Constancy.
Morgan Stanley’s entry indicators a shift by giant banks from distributing third-party crypto merchandise towards issuing their very own.
Till lately, U.S. banks largely restricted their function to custody and brokerage providers, citing regulatory uncertainty and threat controls. That stance has begun to alter as federal businesses clarified how banks can have interaction with digital belongings.
In December, the Workplace of the Comptroller of the Forex stated banks could 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 spanking new issuers.
Morgan Stanley steps deeper into bitcoin
The proposed bitcoin belief can be sponsored by Morgan Stanley Funding Administration. Shares can be created and redeemed in giant blocks by approved individuals, both in money or in type.
The fund’s internet asset worth can be calculated every day utilizing a pricing benchmark primarily based on exercise throughout main spot bitcoin exchanges. Retail traders would commerce shares on a secondary market via 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 financial institution widened eligibility for crypto investments to incorporate all purchasers and account varieties.
By providing a proprietary bitcoin ETF, the agency can combine the product straight into consumer portfolios and retain administration charges which may in any other case go to rival issuers.
The transfer additionally displays the economics of the bitcoin ETF market. Spot bitcoin funds have change into a few of the fastest-growing merchandise within the U.S. ETF trade, with regular inflows even during times of value volatility. BlackRock’s bitcoin ETF emerged as one of many agency’s high 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.
