Updated 22 Mar, 2021

Morgan Stanley Soon to Offer Access to Bitcoin Funds

 

Morgan Stanley

 

Key Takeaways:

  • Institutional demand for bitcoin is growing among banks
  • Morgan Stanley to become the first US bank to offer direct access to bitcoin

Big Institutional Players Hot on Bitcoin

Bitcoin’s growing acceptance has recently been through the roof. Major financial institutions, big tech companies, and legendary investors have embraced the idea to offer, trade or invest in the world’s largest cryptocurrency, bitcoin. The most recent example is Morgan Stanley, a Wall Street giant, managing over $4tn in assets.

Morgan Stanley announced last week it plans to offer its clients access to three Bitcoin funds that will allow trading or holding the crypto asset under strict rules. If Morgan Stanley makes the step, it will be the first US bank to offer direct access to bitcoin as a tradeable asset. Goldman Sachs, JPMorgan Chase, and Bank of America currently do not at the moment provide direct investments in bitcoin.

Morgan Stanley’s Crypto Plan

The launch of three bitcoin funds by Morgan Stanley is set to happen in the coming weeks in order to meet the rising demand by both institutional and individual clients of the bank. Access, however, will be offered to wealthy individuals who have at least $2mn in assets held by the bank. Investment firms will be able to use the service if they have at least $5mn at the bank. Both sets of clients will be allowed to allocate to bitcoin a maximum of 2.5% of their total net worth. The restrictions are set in order to provide protection for investors against downside risks and the high volatility of the asset.

The move represents another step towards mainstream adoption and large-scale acceptance by the financial industry, especially investment banks, which have been warming up to the crypto space this year. Earlier, Goldman Sachs announced it has launched a crypto trading desk and is now dealing with bitcoin futures for its large client base. In early March, JPMorgan also expressed a desire to join the cryptocurrency revolution. The bank is on its way to offer a “cryptocurrency exposure basket”, similar to an exchange-traded fund (ETF). The basket will consist of companies that hold bitcoin in their balance sheet and are exposed to cryptos, such as MicroStrategy, Square, Riot Blockchain, Nvidia, and PayPal.