Morgan Stanley expects bitcoin to hit US banks’ balance sheets, although key obstacles remain, according to Amy Oldenburg, the bank’s head of digital asset strategy.
Speaking at the Bitcoin Conference in Las Vegas, Oldenburg, who was named the new head of digital asset strategy this year, described how the firm is laying the groundwork for the expansion of its digital asset business as customer demand increases.
“It has been many years since we have been involved in the broader digital asset space and the regulatory environment has been more supportive of us doing so,” Oldenburg said.
Oldenburg, who will speak at CoinDesk’s Consensus Miami conference this week, also said that US banks could eventually hold bitcoin on their own balance sheets. However, he pointed out several barriers, such as the Federal Reserve, Basel rules and the need for multiple global regulators, before a bank of Morgan Stanley’s scale can begin including bitcoin on its balance sheet.
This is not the first time that a banking giant has said that banks will eventually move further into the digital asset sector. BNY CEO Robin Vince said in March that large financial institutions will drive the next phase of cryptocurrency adoption by serving as a bridge between traditional finance and digital assets. Although banks first need regulatory clarity before betting on the sector.
However, Morgan Stanley is not standing still and has already begun its foray into the digital asset space, Oldenburg said. The banking giant recently launched MSBT, a bitcoin-backed exchange-traded product and the first of its kind from a chartered bank in the United States. The product attracted more than $100 million in its first six days of trading.
What made those entries particularly surprising is that they came entirely from self-directed clients; Morgan Stanley’s own financial advisors hadn’t even started offering the product yet, Oldenburg said.
“That was all self-directed, it wasn’t even available on the wealth platform advice,” he said. This dynamic shows that there is a significant demand for this type of products from customers.
Oldenburg said there is a significant gap between what advisors offer clients and where the demand lies. While Morgan Stanley recommends a 2% to 4% bitcoin allocation to clients, the slow adoption among advisors is due to an educational issue, Oldenburg said. He also noted that 80% of ETP exposure on the wealth platform is self-directed and that the bank has launched internal training programs to bring financial advisors up to speed.
The appetite for regulated exposure to bitcoin is well established, BlackRock’s IBIT has accumulated more than $61 billion in assets, becoming the fastest-growing ETF in history since its launch in January 2024.
Additionally, Oldenburg said Morgan Stanley is seeking an OCC digital trust charter, which would allow the bank to custody cryptocurrencies directly and offer spot cryptocurrency trading on its wealth platform. The MSBT product itself uses Coinbase and BNY Mellon as dual custodians.
Read more: Wall Street’s crypto push has been years in the making, says Morgan Stanley
