On August 2nd, Morgan Stanley told its around 15,000 financial advisors that as of August 7th they would be able to solicit eligible clients to purchase shares of two Bitcoin ETFs. The two approved Bitcoin ETFs are BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund.

This move is a first among major Wall Street banks, as Morgan Stanley is one of the world’s largest wealth management firms. Many are viewing it as the latest sign of Bitcoin’s adoption by mainstream finance.

Trading of 11 approved Spot Bitcoin ETFs began on January 11th, and inflows immediately were (and continue to be) massive with respect to prior ETF launches. However, Wall Street’s major wealth management players did not immediately embrace the new ETFs. Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo still forbid their financial advisors from pitching Bitcoin ETFs, only allowing transactions if their clients are actively seeking out the product.

While Vanguard is also currently maintaining the same stance as those listed above, the recent appointment of new CEO Salim Ramji has caused rumblings that tides may be turning at Vanguard.

According to those with knowledge of the situation, Morgan Stanley decided to make the move in response to continued demand from clients to gain exposure to the evolving digital asset market. Morgan Stanley is still being cautious in its rollout, with eligible clients having to check all of the following boxes:

• Client must have a net worth of at least $1.5 million
• Client must have an aggressive risk tolerance
• Client must have the desire to make speculative investments
• Only eligible for taxable brokerage accounts (not retirement accounts)

Morgan Stanley will also monitor the crypto holdings of clients to ensure exposure to the volatile asset class is in line with their recommendations. While they have not yet committed to whether or not they will offer access to newly approved ether ETFs, Morgan Stanley has said they will monitor market developments.

The Takeaway

Another example of Bitcoin game theory at work.

Institutions are making it easier for non-Bitcoiners to access the space–more are likely to follow, IMO.

The regulatory landscape seems to be trending in a favorable direction.

Politicians are coming out in support of Bitcoin to win votes from Bitcoin enthusiasts.

Nation-states have adopted Bitcoin.

State pension funds are adopting Bitcoin.

This is the adoption curve at work. Don’t wait to educate yourself on this emerging technology.

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Investment advisory services offered through Crossover Capital Brands, LLC (dba Crossover Capital), a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

This material is intended for informational purposes only. It should not be construed as legal or tax advice, and is not intended to replace the advice of a qualified attorney or tax advisor. This information is not an offer or a solicitation to buy or sell securities. The information contained may have been compiled from third party sources, and is believed to be reliable.

Alternative investments – such as hedge funds and private equity/venture capital funds – are speculative and involve a high degree of risk. Likewise, the emergence of digital assets comes with its own speculative characteristics and involves a high degree of risk. Various digital assets have unique features, and the regulatory risk environment continues to change as governance requirements, rules, and lawsuits emerge. There may be material differences in the type of marketplaces available for digital assets, and there could be significant restrictions or limitations on withdrawing from or transferring these types of investments. Digital assets may incur higher fees when compared to traditional assets, and these expenses may offset returns.

Crossover Capital may not be able to independently verify digital asset valuations provided by institutions that hold or offer digital asset services. As a result, Crossover Capital will generally rely on information reported to it by third parties. As such, the information contained herein is for informational purposes. Clients should recognize that they may bear digital asset-based fees and expenses at the manager-level, as well as indirect fees, expenses, and performance-based compensation for digital assets. Spot bitcoin exchange-traded products were recently approved for listing and trading by the SEC. However, such approvals do not indicate SEC approval to use or invest in bitcoin. Clients should remain cautious and aware of the various risks associated with digital assets that have a value tied to bitcoin or other crypto related products.