Morgan Stanley is making headlines by becoming the first major bank in the US to allow its financial advisers to actively sell Bitcoin exchange-traded funds (ETFs) to select clients.
This move is a significant milestone in the adoption of cryptocurrency within traditional finance.
After months of anticipation, the bank’s wealth advisors can sell Bitcoin ETFs to clients, marking a shift in how the bank approaches cryptocurrency.
Previously, financial advisers could only respond to client inquiries about Bitcoin investments, but now they can actively recommend these products.
This change applies specifically to two key Bitcoin investment products: the iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund.
This decision by Morgan Stanley involves around 15,000 investment advisors, each now able to offer Bitcoin ETFs to clients with substantial portfolios. It represents trillions of dollars in potential investments.
As noted by CNBC, BlackRock and Fidelity’s Bitcoin products are now being presented to Morgan Stanley clients, which could lead to increased activity in the Bitcoin ETF market.
Cosmo Jiang from Pantera Capital observed that this development has largely flown under the radar.
In a recent interview, he noted that while Bitcoin ETFs have attracted considerable investment this year, major issuers have only tapped into a fraction of their distribution potential.
The expansion of access to these products through large financial institutions like Morgan Stanley could significantly increase distribution, signalling a major development in the cryptocurrency landscape.
Crypto adoption gains momentum
Morgan Stanley’s move reflects a broader trend among financial institutions towards embracing cryptocurrency products.
Recently, spot Ethereum ETFs were introduced to the US market, and some firms are now planning to offer funds that would hold Solana.
Earlier in the year, US spot Bitcoin ETFs also launched, drawing significant interest from both the crypto community and traditional finance sectors.
The iShares Bitcoin Trust, managed by BlackRock, saw a 71-day streak of inflows, indicating strong investor interest in Bitcoin.
With Morgan Stanley’s advisers now able to promote products like IBIT, there is potential for even broader adoption among wealthy clients.
However, these offerings are currently limited to clients with a net worth of at least $1.5 million and are restricted to taxable brokerage accounts, not retirement accounts.
According to the co-founder of ZX Squared Capital, CK Zheng, Morgan Stanley’s decision is a crucial step towards mainstream Bitcoin adoption.
By educating clients and integrating Bitcoin into long-term investment strategies, financial advisers can help position Bitcoin as a stable part of diversified portfolios, moving away from its image as a speculative asset.
Impact on the financial industry
The decision by Morgan Stanley could have far-reaching effects, potentially prompting other major financial institutions like UBS, Bank of America Merrill Lynch, and Wells Fargo to follow suit.
The founder of Edelman Financial Services, Ric Edelman, has suggested that advisers might direct over $150 billion into spot Bitcoin ETFs over the next two years. This would reflect a growing acceptance of cryptocurrencies in mainstream investment strategies.
However, the short-term impact of Morgan Stanley’s decision on Bitcoin ETF inflows remains uncertain.
Recently, US Bitcoin funds experienced $550 million in outflows due to market volatility.
Despite this, analysts remained optimistic about the long-term prospects of Bitcoin ETFs, especially with backing from significant financial players such as BlackRock and Fidelity.
In the wider context of cryptocurrency and finance, market volatility continues to be a focal point for investors. The VIX, a key measure of stock market volatility, has surged recently, highlighting the turbulent market conditions that began in August.
This volatility could have implications for the broader acceptance of cryptocurrency investments, as investors navigate these uncertain times.
