Morgan Stanley anticipates that bitcoin will eventually be included on the balance sheets of US banks, although several significant obstacles remain, as stated by Amy Oldenburg, the bank's head of digital asset strategy, during the Bitcoin Conference in Las Vegas. Oldenburg emphasized that the firm is working to expand 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 become more involved in the digital asset space. While Oldenburg believes that US banks may eventually hold bitcoin on their balance sheets, she highlighted several barriers, including the Federal Reserve, Basel rules, and the need for multiple global regulators. This isn't the first time a major bank has expressed interest in entering the digital asset sector, as BNY CEO Robin Vince stated in March that large financial institutions will drive the next phase of crypto adoption.
However, regulatory clarity is necessary before banks can fully invest in the sector. Morgan Stanley has already begun its push into the digital asset space with the launch of 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, demonstrating significant demand for such products.
Oldenburg pointed out that there is a significant gap between what advisors are offering and where client demand lies, with Morgan Stanley recommending a 2%-4% bitcoin allocation to clients. To address the slow adoption among advisors, 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.
Furthermore, 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.