With Bitcoin On The Rise, Morgan Stanley Joins Institutional Adopters

Morgan Stanley headquarters in NYC
Credit: Reuters / Shannon Stapleton -

By Landon Manning

As bitcoin continues to grow beyond expectations, traditional financial institutions continue to seek ways to allow their customers access to this lucrative market. Now, the latest to join the trend is Morgan Stanley.

On March 17, the financial conglomerate announced its move to allow its top-level clients access to bitcoin funds. Although there would still be a degree of insulation separating these investors from the actual bitcoin itself, this move marks a significant step in the progress of banks toward full adoption of cryptocurrency.

These bitcoin fund options look essentially like this: In approximately one month, Morgan Stanley will allow its current clients flagged with “high risk tolerance” to begin investing in these funds. To qualify, clients will need to have at least $2 million in assets held by Morgan Stanley, have held accounts with the bank for longer than six months and can only invest up to 2.5 percent of their net worth into these funds, in addition to the aforementioned demand for risk tolerance.

Once these hurdles have been cleared, however, these clients will be able to invest in three different funds, two run by Galaxy Digital and one a joint operation from FS Investments and NYDIG. The exact details of client participation with these funds are a little hazy at the moment, according to CNBC, with sources claiming that clients demanded “exposure” to cryptocurrency, and these funds may offer both an investment pegged to the relative success of bitcoin as well as actual ownership of the currency.

This is all a very new process, and Morgan Stanley has stated that a large part of its preparation in the month until the program goes live will consist of training its own in-house financial advisors in the world of cryptocurrency investment. Depending on the success, though, a great range of possibilities could open up. The bank has already set requirements for new funds that wish to join the three listed currently, such as having $5 million in liquid assets.

This news comes on the heels of several other banks looking to cautiously poke their way into the world of bitcoin. Earlier this month, for example, both Goldman Sachs and JPMorgan Chase & Co. announced plans to start opening up the space to their clients. Regulatory uncertainty has prevented them from making a more widespread rollout, as is likely also the case with Morgan Stanley. Yet tepid first moves are being paired with a voracious demand to research practical applications and a vocal support for the potential windfalls of cryptocurrency.

Even where skepticism remains in the banking industry, it is absolutely clear that the previous disdain that the field has held for bitcoin in the past is simply no longer possible. Although Deutsche Bank, for example, has not expanded on any concrete plans besides those it discussed at the World Economic Forum in December, it has called Bitcoin “too big to ignore” in a report from March 18. The banking sector has by no means been the tip of the spear in Bitcoin adoption over the years, but it now looks like the derision and naysaying has finally melted away in the face of the world’s best cryptocurrency’s runaway success.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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