Morgan Stanley has allowed its network of financial advisors to offer bitcoin exchange-traded funds (ETFs) to certain clients. On 7 August 2024, approximately 15,000 financial advisors at the firm gained the ability to recommend shares of two bitcoin ETFs to eligible clients.

The funds in question are BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund. This decision by Morgan Stanley reflects a growing acceptance of bitcoin within mainstream finance. In January, the US Securities and Exchange Commission approved applications for 11 spot bitcoin ETFs, providing a more accessible and cost-effective investment option for bitcoin.

Despite bitcoin’s resilience through market downturns, the collapse of crypto exchange FTX, and scepticism from prominent financial figures such as JPMorgan Chase’s CEO Jamie Dimon and Berkshire Hathaway’s CEO Warren Buffett, major Wall Street wealth management firms have been cautious. At the time of writing, companies such as Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo continue to restrict their advisors from proactively offering bitcoin ETFs, allowing trades only if clients specifically request them. What influenced this decision? Morgan Stanley’s decision appears to be driven by client demand and a response to the evolving digital asset market.

However, the bank remains cautious in its approach, as only clients with a net worth of at least USD 1.5 million, a high-risk tolerance, and an interest in speculative investments will be eligible for bitcoin ETF recommendations. These investments will be restricted to taxable brokerage accounts, not retirement accounts. The bank plans to monitor clients’ cryptocurrency holdings to prevent excessive exposure to this volatile asset class.

The only crypto investments available for solicitation at Morgan Stanley will be the two bitcoin ETFs from BlackRock and Fidelity. Previous private funds from Galaxy and FS NYDIG, which were offered starting in 2021, were discontinued earlier this year. Morgan Stanley is also observing the development of the ether ETF market but has not yet decided whether it will offer access to these products.

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