Morgan Stanley reportedly eyeing spot Bitcoin ETFs as demand shows no sign of slowing
The Wall Street behemoth is carrying out due diligence on the products, according to sources close to the matter, CoinDesk reported. If approved, Morgan Stanley would be the first among large registered investment advisor (RIA) networks and broker-dealer platforms to list the ETFs, potentially opening the floodgates for the likes of Merrill Lynch or Wells Fargo to turbocharge inflows.
Morgan Stanley declined to comment when reached by Fortune.
As Bitcoin edges closer to its all-time high of $69,000 “opening the floodgates through more access points could support further buoyancy for Bitcoin,” Vetle Lunde, a senior analyst at K33, told Fortune.
The 10 currently traded U.S. spot Bitcoin ETFs set a new record for daily trading volumes on Wednesday, with more than $7.6 billion in activity, according to Bloomberg data. The day before, BlackRock saw $520 million flood into its ETF iShares Bitcoin Trust (IBIT), marking the largest daily inflow so far.
“Word is wirehouse platforms are seriously looking at adding them soon. I’m sure pressure is mounting for them” as ETF inflows continue to accelerate, Bloomberg’s Eric Balchunas tweeted on Wednesday, referring to large broker-dealers. “With grassroots demand like this they gonna have to expedite.”
He added: “Imagine being [a] Morgan adviser and your client wants IBIT and you have to be like ‘I don’t have access to it, my mommy (the platform gatekeeper) won’t allow it.’ That’s gotta be embarrassing.”
RIDIC: the New Nine doubled their volume record (set Monday) with just about $6b traded.. $IBIT led w $3.3b of it, Fidelity did $1.4b (both double their prev records). The total number of trades was double too, over half a million individual trades bt them. $IBIT alone > $QQQ. pic.twitter.com/ZzB5PWXA4f
— Eric Balchunas (@EricBalchunas) February 28, 2024
“These networks and platforms are the addressable market for Bitcoin that the ETFs were always supposed to open up. We know of other big wirehouses or advisor platforms that have approved some of these ETFs for trading already,” Bloomberg analyst James Seyffart told Fortune. “I think eventually the vast majority of platforms, if not all, will approve these things.”
But it may take the larger platforms a bit longer to establish these vehicles because of longer due diligence processes, Seyffart added.
With over $150 billion in assets under management, Morgan Stanley first offered clients access to Bitcoin via a pair of external crypto funds in 2021, and was the first major bank to do so. The funds were offered by Galaxy Digital and NYDIG for qualified investors.
If platforms like Morgan Stanley list the ETFs, the educational element will be the most significant long-term consequence for Bitcoin’s trajectory, Andy Baehr, head of product at CoinDesk Indices, told Fortune.
“Advisors can talk about Bitcoin during their day jobs,” Baehr said, “and really think about how it can help contribute to portfolios on such massive scales like this.”
