Morgan Stanley is seeking regulatory approval to launch exchange-traded funds tied to the price of cryptocurrency tokens, according to filings with the U.S. Securities and Exchange Commission on Tuesday, the first such move by a big U.S. bank.
The bank is looking to launch ETFs tied to the price of cryptocurrencies bitcoin and solana, according to the filings, aiming to deepen its presence in the cryptocurrency space.
Regulatory clarity under U.S. President Donald Trump has encouraged mainstream finance companies to embrace digital assets, which were once considered merely speculative instruments.
In December, the Office of the Comptroller of the Currency also allowed banks to act as intermediaries on crypto transactions, narrowing the gap between the traditional sector and digital assets.
Several investors prefer holding crypto via ETFs, which provide greater liquidity and security, and simplified regulatory compliance compared to managing the underlying asset directly.
“It’s interesting to see Morgan Stanley move into a commoditized market, and I suspect that means they want to move clients that invest in bitcoin into their ETFs, which could give them a fast start despite their late entrance,” said Bryan Armour, ETF analyst at Morningstar. “A bank entering the crypto ETF market adds legitimacy to it, and others could follow.”
In the two years since the SEC approved the first U.S.-listed spot bitcoin ETF, a wide array of financial institutions—mostly asset managers—have stepped up to issue such funds.
U.S. banks, which have mostly only acted as custodians of client investments, are looking to evolve from cautious facilitators to active advisers.
In October, Morgan Stanley expanded access to crypto investments to include all clients and types of accounts, according to media reports.
Bank of America followed suit, allowing its wealth advisers to recommend allocations to crypto in client portfolios from January, without any asset threshold.
—By Arasu Kannagi Basil and Ateev Bhandari, Reuters