According to Amy Oldenburg, Morgan Stanley's head of digital asset strategy, the bank anticipates that bitcoin will eventually be featured on US bank balance sheets, despite several obstacles that need to be addressed. Oldenburg, who recently spoke at the Bitcoin Conference in Las Vegas, highlighted the bank's efforts in laying the groundwork for expanding its digital asset business in response to growing client demand.
She noted that the regulatory environment has become more supportive, allowing the firm to increase its involvement in the digital asset space. However, Oldenburg pointed out that multiple global regulators, the Federal Reserve, and Basel rules are among the barriers that must be overcome before a bank like Morgan Stanley can include bitcoin on its balance sheet. This is not the first time a major banking institution has expressed its intention to venture further into the digital asset sector, with BNY CEO Robin Vince stating that large financial institutions will drive the next phase of crypto adoption by serving as a bridge between traditional finance and digital assets, although regulatory clarity is required before making significant investments. Morgan Stanley has already begun its foray into the digital asset space, having recently launched MSBT, a bitcoin-backed exchange-traded product that drew over $100 million in its first six days of trading, with all inflows coming from self-directed clients.
Oldenburg emphasized that there is a significant gap between the products offered by advisors and client demand, with Morgan Stanley recommending a 2%-4% bitcoin allocation to clients. The slow adoption among advisors is attributed to a lack of education, which the bank is addressing through internal training programs. The demand 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 to enable the bank to custody crypto directly and offer spot crypto trading on its wealth platform.