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Morgan Stanley has been offering spot Bitcoin ETFs since January, but only for clients who directly express interest to advisors. Marco Verch/flickr

KEY POINTS

  • Morgan Stanley only offers Bitcoin ETFs on an unsolicited basis
  • One source said the bank is currently working on safety measures before an approval
  • A February report revealed that the bank was considering to offer BTC ETFs on its brokerage platform

Investment banking titan Morgan Stanley may soon allow its brokers to solicit customer purchases of spot Bitcoin exchange-traded funds (ETFs), which could drive more ETF inflows in the rising crypto subsector, a recent report revealed.

Morgan Stanley, which has around 15,000 brokers, is exploring the possibility of allowing brokers to recommend Bitcoin ETFs to clients, Advisor Hub reported, citing two senior executives familiar with the investment bank's plans.

A Morgan Stanley representative declined to comment on the report when reached out by International Business Times.

It is worth noting that Morgan Stanley has been offering BTC ETFs since January following their historical approval by the U.S. Securities and Exchange Commission (SEC). However, the offering was only made available on an unsolicited basis, which means advisors can only cater to Bitcoin ETF clients who directly inquire about the offering or have expressed interest in it.

One executive noted that Morgan Stanley was still in the process of establishing "guardrails" for solicited buys, including on allocation limits, the frequency of trading, and risk tolerance requirements.

"We are going to make sure everybody has access to it. We just want to do it in a controlled way," one executive reiterated. The sources did not provide a timeline on when the move will be implemented.

If Morgan Stanley does approve unsolicited spot Bitcoin ETF purchases, it could become the first among investment banking companies that offer BTC ETFs to do so. Like Morgan Stanley, both Wells Fargo and Bank of America's Merrill Lynch only offer Bitcoin ETFs on an unsolicited basis.

While Morgan Stanley may be exploring the expansion of its Bitcoin ETF offering for solicited purchases, one executive noted that most of the bank's clients still deem the product as a speculative asset, "so they put a little bit of money" on it.

Still, solicited Bitcoin ETF purchases on Morgan Stanley are expected to drive more inflows, especially as it could mark a significant transition from the conservative approach global banks have taken since the new offering was introduced.

News of the financial services giant's latest activities came weeks after it was reported that it was considering whether spot BTC ETFs should be added to its list of products on its brokerage platform.

At the time, one source with knowledge of the matter said Morgan Stanley had been looking into the possibility as early as January, after Bitcoin ETFs were approved.

This article was updated to include that a Morgan Stanley declined to comment on Advisor Hub's report. Updated on April 26, 2024, 8:52 a.m. EST.

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