Morgan Stanley anticipates that bitcoin will eventually be included on US bank balance sheets, although several key obstacles remain, according to Amy Oldenburg, the bank's head of digital asset strategy. Oldenburg, who was appointed to her current role this year, discussed the firm's efforts to expand its digital asset business in response to growing client demand during a speech at the Bitcoin Conference in Las Vegas.
She stated, 'The regulatory environment has been more supportive for us to get involved in the broader digital asset space over the past few years.' Oldenburg, who will also be speaking at CoinDesk's Consensus Miami conference, noted that US banks may eventually hold bitcoin on their balance sheets, but highlighted several barriers, including the Federal Reserve, Basel rules, and the need for multiple global regulators, before a bank of Morgan Stanley's scale could start including bitcoin on its balance sheet. This is not the first time a major bank has expressed its intention to venture further into the digital asset sector. BNY CEO Robin Vince stated in March that large financial institutions will drive the next phase of crypto adoption by serving as a bridge between traditional finance and digital assets, although they first require regulatory clarity. Morgan Stanley is taking proactive steps to enter the digital asset space, according to Oldenburg.
The bank recently launched MSBT, a bitcoin-backed exchange-traded product, which is the first of its kind from a US-chartered bank and attracted over $100 million in its first six days of trading. Notably, these inflows came entirely from self-directed clients, as Morgan Stanley's financial advisors had not yet begun offering the product. This demonstrates significant demand for such products from clients.
Oldenburg noted that there is a substantial gap between what advisors are offering and where demand lies, with Morgan Stanley recommending a 2%-4% bitcoin allocation to clients. However, the slow adoption among advisors is due to an education problem, according to Oldenburg. She also mentioned that 80% of ETP exposure on the wealth platform is self-directed and that the bank has launched internal training programs to educate financial advisors.
The appetite for regulated bitcoin exposure is well-established, with BlackRock's IBIT amassing over $61 billion in assets and becoming the fastest-growing ETF in history since its launch in January 2024. Furthermore, Oldenburg stated that Morgan Stanley is pursuing an OCC digital trust charter, which would enable the bank to custody crypto directly and offer spot crypto trading on its wealth platform.
The MSBT product itself uses Coinbase and BNY Mellon as dual custodians.