Morgan Stanley anticipates that bitcoin will eventually be included on US bank balance sheets, although significant obstacles remain, as stated by Amy Oldenburg, the bank's head of digital asset strategy, during the Bitcoin Conference in Las Vegas. Oldenburg outlined the firm's efforts to lay the groundwork for expanding its digital asset business in response to growing client demand. She noted that the regulatory environment has become more supportive over the years, allowing the firm to engage in the broader digital asset space.
Oldenburg also mentioned 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 doing so. This isn't the first time a major bank has expressed the view that banks will eventually venture further into the digital asset sector. The CEO of BNY, 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, but emphasized the need for regulatory clarity before making a full commitment to the sector.
Meanwhile, Morgan Stanley has already begun its foray into the digital asset space, with Oldenburg stating that the bank has launched MSBT, a bitcoin-backed exchange-traded product, which drew over $100 million in its first six days of trading, entirely from self-directed clients. This significant demand for such products from clients highlights the gap between what advisors are offering and where client demand lies.
Oldenburg attributed the slow adoption among advisors to an education problem, noting that Morgan Stanley recommends a 2%-4% bitcoin allocation to clients. The bank has launched internal training programs to educate financial advisors and 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.