Morgan Stanley has filed with the SEC to launch its own spot bitcoin and Solana exchange-traded funds (ETFs). While somewhat late to the party, the firm—an asset manager with a wealth management division—is well suited to develop its own crypto-focused vehicles. It would become the first major U.S. bank to issue an ETF tied to bitcoin.
The new funds would be called the Morgan Stanley Bitcoin Trust and the Morgan Stanley Solana Trust. They are designed to hold the crypto assets directly, rather than using derivatives or leverage, and will operate as passive investments rather than making trades based on market conditions.
Bringing the Revenue In-House
Morgan Stanley has been distributing third-party crypto products to its wealth management customers for some time. Initially, financial advisors were allowed to offer crypto investments only to clients with at least $1.5 million in assets. Last October, the bank expanded access, making crypto products available to all clients across all account types, including retirement plans.
The current expansion suggests the strategy was successful. By creating its own crypto investment vehicles, Morgan Stanley can vertically integrate these products into client portfolios, keeping management fees in-house rather than paying them to outside firms like Coinbase.
Since the SEC first approved crypto ETFs two years ago, the category has grown to $120 billion. BlackRock’s spot bitcoin ETFs have become a top revenue source, with allocations exceeding $70 billion. With its wealth management division positioned to help drive sales, Morgan Stanley could compete with these numbers and potentially pave the way for other banks to offer their own crypto products.
Betting on Solana
Morgan Stanley is also betting big on Solana, a blockchain, that, while less well-known than bitcoin, is poised for growth. Solana funds have grown to more than $1 billion in total net assets, aided by technical improvements that have expanded its use cases beyond bitcoin.
Last year, Solana upgraded its blockchain, making it much faster than bitcoin and 10-15 times faster than credit card rails like Visa and Mastercard. The combination of speed, security, and low transaction costs make Solana an attractive option for financial services applications. PayPal, for example, chose to transfer its stablecoin from Ethereum, the leading blockchain provider, to Solana.
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