According to Amy Oldenburg, the head of digital asset strategy at Morgan Stanley, the bank anticipates that bitcoin will eventually be included on US bank balance sheets, although several obstacles remain. Oldenburg made these remarks at the Bitcoin Conference in Las Vegas, where she outlined the firm's efforts to expand its digital asset business in response to growing client demand. She emphasized that the regulatory environment has become more supportive of the bank's involvement in the digital asset space over the years.

However, Oldenburg highlighted several barriers that must be addressed before a bank the size of Morgan Stanley can start holding bitcoin on its balance sheet, including the need for clarity from the Federal Reserve, Basel rules, and multiple global regulators. This is not the first time a major banking institution has expressed its intention to 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 only after receiving regulatory clarity. Meanwhile, Morgan Stanley has already begun its foray into the digital asset space.

The bank recently launched MSBT, a bitcoin-backed exchange-traded product, which 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 dynamic demonstrates significant demand for such products from clients. Oldenburg noted that there is a substantial gap between what advisors are offering and where client demand lies. While Morgan Stanley recommends a 2-4% bitcoin allocation to clients, the slow adoption among advisors is due to an education problem, Oldenburg said. To address this issue, the bank has launched internal training programs to bring financial advisors up to speed.

The appetite for regulated bitcoin exposure is well established, as evidenced by BlackRock's IBIT, which has amassed over $61 billion in assets. Furthermore, Oldenburg revealed 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.