Morgan Stanley May Empower 15,000 Brokers to Offer Bitcoin ETFs

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Key Takeaways

  • Morgan Stanley plans to enable its 15,000 brokers to offer Bitcoin ETFs to clients, aiming to boost cryptocurrency market inflows while proceeding cautiously.
  • Despite existing permissions for spot Bitcoin ETF purchases, there's a noticeable decline in market demand, highlighted by a recent dry spell in inflows for major funds like BlackRock's iShares Bitcoin Trust.
  • The SEC's recent approval of 11 spot Bitcoin ETFs facilitated significant engagement from top financial firms, promoting widespread Bitcoin adoption and amassing over $200 billion in total volume.

Morgan Stanley may allow its 15,000 brokers to propose Bitcoin exchange-traded funds (ETFs) to their customers. The move could potentially drive substantial inflows into Bitcoin and cryptocurrency markets.

While acknowledging the potential move, a Morgan Stanley executive cited in a report from AdvisorHub emphasized the need for a cautious approach.

“We’re going to make sure that we’re very careful about it. We are going to make sure everybody has access to it. We want to do it in a controlled way,” the executive stated.

Currently, Morgan Stanley permits its clients to purchase spot Bitcoin ETFs without making a formal demand. This has been the case since their Fund was approved by the Securities and Exchange Commission (SEC) in January 2024.

The investment bank is now exploring allowing its brokers to pitch these spot Bitcoin ETFs to customers directly.

Spot Bitcoin ETFs expose investors to Bitcoin without direct ownership, minimizing their risk to the highly speculative asset.

Implementing Morgan Stanley’s proposed recommendation could potentially increase inflows into spot Bitcoin ETFs, which have recently shown signs of waning demand.

BlackRock Leads the Way in Spot Bitcoin ETFs Holding

Notably, BlackRock’s iShares Bitcoin Trust (IBIT) suffered a rare dry spell on April 24, with zero inflows, following a remarkable 71-day streak of attracting over $15.5 billion in assets.

However, IBIT’s zero inflow was not isolated. Most of the other U.S.registered spot Bitcoin ETFs also recorded a dry spell, except for Fidelity’s Wise Origin Bitcoin Fund (FBTC) and ARK’s 21Shares Bitcoin ETF (ARKB), which had modest inflows of $5.6 million and $4.2 million, respectively.

The SEC’s approval of 11 spot Bitcoin ETFs in January has been the major point of contact between Wall Street investment managers like BlackRock, Fidelity, Invesco, and others in the crypto market.

The ETFs enabled large corporations to launch their respective products, which brought about a broader mainstream adoption of Bitcoin as an investment asset.

This success has been remarkable, with U.S. Spot Bitcoin ETFs amassing over $200 billion in total cumulative volume since their launch.

BlackRock’s iShares Bitcoin Trust (IBIT) has been leading the way in this space, recording a 71-day inflow streak that ended on April 24.

Unsurprisingly, BlackRock’s CEO, Larry Fink, who once criticized Bitcoin, has fully embraced it. BlackRock holds over 270,000 BTC worth more than $18 billion, solidifying its position as a major player in the Bitcoin ETF market.

This change in attitude from one of the world’s largest asset managers indicates that the mainstream financial sectors are starting to accept Bitcoin as a viable investment option, which could gain further momentum if Morgan Stanley moves forward with its proposed plan.