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Morgan Stanley, the largest wealth manager in the United States with $3.75 trillion in managed assets, is set to make a groundbreaking move into the cryptocurrency space. Starting August 7, 2024, the firm’s 15,000 financial advisers will be permitted to recommend Bitcoin exchange-traded funds (ETFs) to their clients, as reported by CNBC. This decision marks a significant milestone for the broader acceptance of crypto in mainstream finance.
The two Bitcoin ETFs approved for recommendation are BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC). However, other spot crypto ETFs, including the newly launched Ether ETFs, have not yet received approval.
The inclusion of Morgan Stanley is a pivotal event for the crypto industry. Historically, major financial advisory firms, often referred to as wirehouses, have been reluctant to integrate spot crypto ETFs into their portfolios. These firms, which also include Bank of America, JPMorgan Chase, and Wells Fargo, play a crucial role in shaping financial product trends.
Despite the cryptocurrency market’s impressive growth, its reach has been largely confined to crypto-native retail investors and hedge funds. In 2024, approximately $60 billion has flowed into spot crypto ETFs, with minimal participation from traditional financial advisors. The endorsement by Morgan Stanley could significantly alter this landscape.
Wirehouses like Morgan Stanley set high standards for the adoption of new financial products. Their acceptance of crypto ETFs is a potential game-changer, as highlighted by Kyle DaCruz, Director of Digital Assets Product at VanEck. Morgan Stanley, with its substantial advisory network managing $3.75 trillion, including $1 trillion in self-directed client accounts, is particularly influential.
BlackRock’s IBIT and Fidelity’s FBTC are establishing themselves as leading options among Bitcoin ETFs. Their adoption is increasing not only among wirehouses like Morgan Stanley but also among independent financial advisers. Roxanna Islam, Head of Sector and Industry Research at VettaFi, notes this growing trend.
The continued acceptance of these ETFs by major advisory platforms could lead to significant inflows from financial advisers into spot Bitcoin ETFs. Matthew Sigel, Head of Digital Assets Research at VanEck, anticipates this surge, highlighting the broader impact of Morgan Stanley’s decision on the crypto market.