Morgan Stanley, the largest wealth manager in the United States, is poised to allow its 15,000 financial advisers to start recommending Bitcoin (BTC) exchange-traded funds (ETFs) to clients. According to a recent CNBC report, this significant shift will commence on August 7. The wealth managers can begin advising eligible clients to purchase shares of two Bitcoin ETFs: BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC). However, other spot crypto ETFs, including the newly launched Ether (ETH) ETFs, have yet to receive approval.
This development marks a historic milestone for the crypto industry. Traditionally, major financial advisory firms, known as wirehouses, have been reluctant to embrace spot crypto ETFs. Alongside Morgan Stanley, these firms include prominent names such as Bank of America, JPMorgan Chase, and Wells Fargo. Collectively, these financial advisories manage trillions of dollars, setting a high bar for the acceptance of new financial products.
Despite the growing valuations in the crypto space, the industry has struggled to extend its reach beyond its core base. In 2024, approximately $60 billion has flowed into spot crypto ETFs, primarily from crypto-native retail investors and hedge funds. However, gaining acceptance from wirehouses like Morgan Stanley can be a game-changer for the crypto sector. Kyle DaCruz, director of digital assets product at VanEck, an asset manager that sponsors crypto ETFs, emphasized this point in a statement.
Morgan Stanley stands out among wirehouses due to its size and influence. The advisory network manages around $3.75 trillion, including $1 trillion in self-directed client accounts. Across all its banking units, Morgan Stanley’s total assets under management amount to $6.2 trillion, according to financialplanning.com.
BlackRock’s IBIT and Fidelity’s FBTC are emerging as leading options among Bitcoin ETFs. These funds are witnessing adoption not only among wirehouses like Morgan Stanley but also among independent financial advisers. Roxanna Islam, head of sector and industry research at VettaFi, a fund research firm, highlighted the growing adoption of these ETFs in a recent interview.
Continued uptake of Bitcoin ETFs by leading advisory platforms could trigger a surge in inflows from advisers into spot Bitcoin ETFs. Matthew Sigel, head of digital assets research at VanEck, shared this insight, suggesting that the trend could significantly impact the market.
In summary, Morgan Stanley’s decision to embrace Bitcoin ETFs from BlackRock and Fidelity represents a pivotal moment for the crypto industry. As the largest wealth manager in the United States, Morgan Stanley’s endorsement could pave the way for broader acceptance of crypto ETFs among other major financial advisory firms. This shift has the potential to bring a new wave of investments into the crypto market, further solidifying its position in the global financial landscape.
The move by Morgan Stanley is not just a significant development for the firm but also a reflection of the broader trend of institutional adoption of cryptocurrencies. As more traditional financial institutions begin to recognize the potential of digital assets, the crypto industry stands to benefit from increased legitimacy and a wider investor base.
With Morgan Stanley leading the way, it is likely that other major financial advisory firms will follow suit. This could create a domino effect, leading to a greater influx of institutional money into the crypto market. As a result, the adoption of Bitcoin ETFs and other crypto-related financial products could see a substantial increase.
The endorsement of Bitcoin ETFs by a major player like Morgan Stanley also underscores the growing confidence in the stability and potential of these investment vehicles. As the crypto market continues to mature, the introduction of regulated and secure investment options like ETFs will be crucial in attracting more conservative investors who have been hesitant to enter the space.
In conclusion, Morgan Stanley’s embrace of Bitcoin ETFs from BlackRock and Fidelity is a landmark moment for the crypto industry. It signifies a shift in the perception of digital assets among traditional financial institutions and sets the stage for broader acceptance and adoption. As the crypto market continues to evolve, the support of major financial players like Morgan Stanley will be instrumental in driving its growth and integration into the mainstream financial system.
