Morgan Stanley is taking steps to expand its presence in digital assets by applying to the relevant authorities for permission to establish cryptocurrency price-tracking exchange-traded funds (ETFs).
Documentation filed with the US Securities and Exchange Commission on Tuesday shows that Morgan Stanley is working to create ETFs that track cryptocurrency tokens like Bitcoin and Solana. The development is a breakthrough for Morgan Stanley, which is a major US bank testing these ETFs for the first time.
The case file illustrates how a new regulatory environment is changing the dynamics of mainstream finance and digital currencies. In the United States, under President Donald Trump, there are stronger indications from regulators that have forced mainstream financial institutions to consider cryptocurrencies as investment assets instead of a fringe investment activity.
The Office of the Comptroller of the Currency paved the way for banks to become middlemen in crypto transactions in December. Meanwhile, there were changes to SEC regulations for initial spot crypto ETF listings introduced in the previous year, making way for the development of more products that are linked to crypto tokens.
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In fact, many investors now find it attractive to invest in cryptocurrency through the use of ETFs instead of investing directly into cryptocurrencies. This is mainly because ETFs provide a high degree of liquidity and are easily regulated, among other factors.
Since the first spot ETF for bitcoin on a US stock exchange was approved by the SEC two years ago, asset managers have spearheaded issuers, while banks have played a largely custodian role, although that trend is about to change.
In the US, lenders are moving from cautious facilitators to advisers. Morgan Stanley expanded the offering of cryptocurrency investments to all of its client accounts in October, as reported in the media. Bank of America also implemented the same in January, allowing wealth management advisers to offer advice on cryptocurrency investments regardless of the clients’ asset requirements.
The Morgan Stanley move is a harbinger of a larger shift because Wall Street banks want a pivotal position in the quickly evolving crypto investment market.