Morgan Stanley Advisors Can Reportedly Market Two Bitcoin ETFs To Some Clients

Alice Morgan / Investopedia

Illustration bitcoin and spot bitcoin ETFKey Points

Morgan Stanley advisors can now recommend two spot Bitcoin exchange-traded funds (ETFs) to their clients, CNBC reported on Friday.

These investments will only be offered to select clients with net incomes above $1.5 million and aggressive risk tolerances, sources told CNBC.

Spot Bitcoin ETFs began trading in the US earlier this year.

Wealth advisors at Morgan Stanley (MS) can now offer two spot Bitcoin (BTCUSD) exchange-traded funds (ETFs) to some of their clients, CNBC reported on Friday.

Citing sources, CNBC said the bank’s massive advisor force could seek investments from eligible clients in BlackRock’s IShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC). Clients could be eligible if they have a net worth of at least $1.5 million, a high risk tolerance and an interest in investing in speculative assets.

Why Is This Important?

This is a big step for the traditional financial sector to embrace digital assets. When spot bitcoin ETFs began trading in January, some brokerages like Fidelity or Charles Schwab (SCHW) began offering them directly, while other major brokerages like Morgan Stanley took a more cautious approach, limiting the products to select clients only and on an unsolicited basis. This means that these products are only offered when eligible clients ask for them.

This is the first time one of Wall Street’s big banks has changed that.

Bloomberg’s senior ETF analyst Eric Balchunas called the decision a “significant deal,” citing the roughly $5.7 trillion in client assets managed by Morgan Stanley’s advisors, the largest among U.S. brokerages that include JPMorgan (JPM), Goldman Sachs (GS), Bank of America (BAC) and Wells Fargo (WFC).

With advisors now able to actively market these spot bitcoin funds, their chances of adoption could increase.

Fidelity and iShares Bitcoin ETFs Attract Most Funding Ever

That is, remote spot bitcoin ETFs have collected more than $17.7 billion in net inflows since they began trading, despite major outflows from Grayscale’s Bitcoin Trust (GBTC). iShares and Fidelity bitcoin ETFs have been the biggest gainers to date, with $20 billion and nearly $10 billion in investor money, respectively, according to data from Farside Investors.

This could set a precedent for other digital assets as well. Recently, spot ether ETFs have started trading at brokerages such as Fidelity and Schwab. While Morgan Stanley is available to its clients unsolicited, it’s unclear whether the firm will allow advisors to offer their clients investments in spot ether ETFs.

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