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Morgan Stanley (MS) Mulling to Offer Spot Bitcoin ETFs

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Morgan Stanley (MS - Free Report) is likely to add spot bitcoin ETF products to its brokerage platform, per a CoinDesk article that cited people with knowledge of the matter.

Particularly, the company has been evaluating to offer spot bitcoin ETFs to clients ever since the Securities and Exchange Commission (SEC) approved their introduction in January. Currently, there are 10 spot bitcoin ETFs trading in the country, with Grayscale's GBTC, BlackRock's IBIT and Fidelity's FBTC holding most assets.

Bitcoin ETF offerings will notably broaden the investor base for bitcoin, as buying ETFs is easier than purchasing the bitcoin. While a significant amount has already been invested in these products, bitcoin ETF offerings by preeminent registered investment advisor networks and broker-dealer platforms of firms like Merrill Lynch, Morgan Stanley and Wells Fargo will increase investments in these products by a significant amount.

Morgan Stanley is a leader in the alternative investment and private market space, with more than $150 billion in assets under management. It was the first major U.S. bank to offer bitcoin fund access to its wealthy clients in 2021. In its first-quarter earnings call in April 2021, the company confirmed that it was offering wealth management clients exposure to bitcoin through a pair of external crypto funds.

Management remarked that the bank was allowing qualified investors to gain access to two passive funds. It is understood that these funds were offered by Galaxy Digital and NYDIG.

The move will be in line with the company’s aim to focus on the wealth management segment as it is less dependent on the capital markets and less volatile revenue sources. The company’s strategic expansion efforts, including the buyouts of Eaton Vance, E*Trade Financial and Shareworks, are steps in this direction. Also, the WM segment’s total client assets witnessed a five-year (2018-2023) compound annual growth rate (CAGR) of 17.4%.

Though the difficult operating backdrop might lead to volatility in the metric in the near term, the trend is likely to keep improving once the operating environment becomes more favorable. For 2024, we project the WM segment’s total client assets to grow 3.7% on a year-over-year basis.

MS shares have gained 1.1% over the past six months compared with the industry’s 12.3% growth.

 

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MS presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In January, it was reported that The Goldman Sachs Group, Inc. (GS - Free Report) was being considered to become the authorized participant (“AP”) for the spot bitcoin ETF, which Grayscale and BlackRock Inc. (BLK - Free Report) have been planning to launch.

As an AP for spot bitcoin ETF, Goldman would be entrusted with the responsibility of tracking the ETF share price with underlying assets of fund. Also, BLK became the first asset manager to file for the spot bitcoin ETF in June 2023, paving the way for filings by other asset managers.


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