According to Amy Oldenburg, Morgan Stanley's head of digital asset strategy, the bank anticipates that bitcoin will eventually be included on US bank balance sheets, although several obstacles need to be addressed. Oldenburg, who recently took on her new role, discussed the bank's efforts to expand its digital asset business in response to growing client demand at the Bitcoin Conference in Las Vegas. She stated 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 the need for clarity from multiple global regulators, including the Federal Reserve and Basel rules, before a bank like Morgan Stanley can do so.
This is not the first time a major bank has expressed interest in the digital asset sector, as BNY CEO Robin Vince previously stated that large financial institutions will drive the next phase of crypto adoption. However, regulatory clarity is necessary before they can fully invest in the sector. Morgan Stanley has already taken steps to enter the digital asset space, launching MSBT, a bitcoin-backed exchange-traded product, which attracted over $100 million in its first six days of trading. Notably, these inflows came from self-directed clients, demonstrating significant demand for such products.
Oldenburg noted that there is a gap between what advisors offer and client demand, with Morgan Stanley recommending a 2%-4% bitcoin allocation. The bank has launched internal training programs to educate financial advisors, as 80% of ETP exposure on the wealth platform is self-directed.
The appetite for regulated bitcoin exposure is evident, with BlackRock's IBIT amassing over $61 billion in assets. Additionally, 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.