Morgan Stanley expects bitcoin to reach US bank balance sheets, although key hurdles 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, outlined how the firm is laying the groundwork for expanding its digital asset business as client demand grows.
“It’s been many years that we’ve been involved in the broader digital asset space, and the regulatory environment has been more supportive of us doing that,” Oldenburg said.
Oldenburg, who will speak at CoinDesk’s Consensus Miami conference this week, also said that U.S. banks may eventually keep bitcoin on their own balance sheets. However, she pointed to several barriers, such as the Federal Reserve, Basel rules and the need for more global regulators, before a bank of Morgan Stanley’s scale could start putting bitcoin on its balance sheet.
This is not the first time a banking giant has said that banks will eventually push further into the digital asset sector. BNY CEO Robin Vince said in March that major financial institutions will drive the next phase of crypto adoption by acting as a bridge between traditional finance and digital assets. Although the banks first need regulatory clarity before going all-in on the sector.
But Morgan Stanley is not standing still and has already started its push 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 US-chartered bank. The product attracted more than $100 million in the first six days of trading.
What made these inflows particularly striking is that they came exclusively from self-directed clients, Morgan Stanley’s own financial advisers hadn’t even started offering the product yet, Oldenburg said.
“All of that was self-directed, it wasn’t even available in advice on the wealth platform,” she said. This dynamic shows that there is significant demand for such products from customers.
Oldenburg said there is a significant gap between what advisers are offering clients and where the demand lies. While Morgan Stanley recommends a 2%-4% bitcoin allocation for clients, the slow adoption among advisers is due to an education problem, Oldenburg said. She also noted that 80% of ETP exposure on the wealth platform is self-managed and that the bank has launched internal training programs to bring financial advisers up to speed.
The appetite for regulated bitcoin exposure is well established, BlackRock’s IBIT has amassed over $61 billion in assets and has become the fastest growing ETF in history since launching in January 2024.
In addition, Oldenburg said Morgan Stanley is pursuing an OCC digital trust charter, which would allow the bank to hold crypto directly and offer spot crypto 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, Morgan Stanley says
