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 key obstacles must be addressed. Oldenburg made these comments while speaking 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 noted that the regulatory environment has become more supportive in recent years, allowing the firm to move forward with its digital asset plans. Oldenburg also mentioned that US banks may eventually hold bitcoin on their balance sheets, but cited 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 putting bitcoin on its balance sheet.
This isn't the first time a major bank has expressed interest in entering the digital asset sector, as BNY CEO Robin Vince recently stated that large financial institutions will drive the next phase of crypto adoption by serving as a bridge between traditional finance and digital assets. However, regulatory clarity is needed before banks can fully engage with the sector. Morgan Stanley has already made significant strides in the digital asset space, including the launch of MSBT, a bitcoin-backed exchange-traded product that drew 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 highlighted the gap between the products offered by advisors and client demand, noting that while Morgan Stanley recommends a 2%-4% bitcoin allocation, slow adoption among advisors is due to a lack of education. To address this, the bank has launched internal training programs to bring financial advisors up to speed.
The appetite for regulated bitcoin exposure is well established, 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.