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On Friday, Morgan Stanley informed its extensive network of financial advisors that they will soon be permitted to offer bitcoin exchange-traded funds (ETFs) to select clients, marking a significant development as one of the first major Wall Street banks to take this step, according to insights from CNBC.
Starting Wednesday, approximately 15,000 of the firm’s financial advisors will be able to recommend two specific bitcoin funds: BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund, as reported by sources familiar with the policy changes.
This strategic shift by Morgan Stanley, recognized as one of the world’s largest wealth management firms, reflects a growing trend within mainstream finance to embrace bitcoin. Earlier this year, the U.S. Securities and Exchange Commission granted approval for 11 spot bitcoin ETFs, opening up investment avenues that are more accessible and cost-effective for investors.
Despite the volatility that bitcoin has experienced—demonstrated through market downturns and notable incidents like the FTX collapse—a significant portion of the financial sector has been hesitant to adopt these new ETFs. Traditional figures in finance, such as JPMorgan Chase CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett, have voiced skepticism about cryptocurrency investments.
This cautious sentiment has led many of Wall Street’s prominent wealth management institutions, including Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo, to restrict their advisors from actively promoting these new offerings, instead permitting trades only if clients express a specific interest.
‘Aggressive’ Risk Profile Required
Morgan Stanley’s decision appears to be a reaction to growing client demand as well as the evolving landscape for digital assets, as shared by unnamed sources familiar with the bank’s internal policy.
However, the firm is exercising a degree of caution in its implementation. Only clients with a net worth of $1.5 million or more, those with a high risk tolerance, and a keen interest in speculative investments are eligible for bitcoin ETF recommendations. These investments will be limited to taxable brokerage accounts, explicitly excluding retirement accounts.
To safeguard against excessive exposure to the inherently volatile nature of cryptocurrencies, Morgan Stanley has indicated that it will closely monitor clients’ crypto holdings. At present, the only approved avenues for investment through Morgan Stanley are the two bitcoin ETFs and private funds offered by Galaxy and FS NYDIG, which had initially become available to clients in 2021.
Furthermore, the firm is observing the development of the market for the newly approved ether ETFs but has not yet made a determination about offering access to those products in the future, according to the same sources.
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