Morgan Stanley has recently applied with the SEC for permission to launch its own spot bitcoin and Solana exchange-traded funds (ETFs). This move marks a significant step for the firm, an established asset manager with a wealth management division. If approved, Morgan Stanley would become the first major U.S. bank to introduce a cryptocurrency ETF focused on bitcoin.
Structure of the Funds
The proposed funds will be named the Morgan Stanley Bitcoin Trust and the Morgan Stanley Solana Trust. These trusts are designed to hold cryptocurrencies directly without using derivatives or leverage, ensuring a passive investment approach that does not involve market-based trading activities.
Expanding Access to Crypto Investments
Morgan Stanley has already been offering third-party crypto products through its wealth management division for some time. Initially, access was limited to clients with at least $1.5 million in assets. However, the bank expanded this access last October, making these investments available to all client types across different account structures, including retirement plans.
This expansion indicates that Morgan Stanley has found success with its existing crypto offerings. By developing its own ETFs, the firm can now integrate these products more deeply into client portfolios, thereby retaining a greater share of management fees instead of paying them out to external providers such as Coinbase.
Competitive Landscape and Future Prospects
The SEC approved the first spot bitcoin ETFs two years ago, leading to an industry worth $120 billion. BlackRock’s bitcoin ETFs have emerged as a significant revenue source, with allocations exceeding $70 billion. Morgan Stanley’s wealth management division is well-positioned to drive sales in this space and could potentially challenge these numbers.
Additionally, Morgan Stanley has shown particular interest in Solana, a blockchain technology that, although less widely known than Bitcoin, is expected to grow. Solana’s funds have amassed over $1 billion in total net assets due to improvements that enhance its utility beyond what Bitcoin offers. For instance, last year, Solana upgraded its blockchain to significantly increase speed—making it much faster than Bitcoin and 10-15 times quicker than credit card networks like Visa and Mastercard. This combination of speed, security, and low transaction costs positions Solana as an attractive alternative for financial services applications.
