Morgan Stanley expects Bitcoin to reach US bank balance sheets, although key hurdles remain, according to Amy Oldenburg, head of the bank’s digital asset strategy.
Speaking at the Bitcoin conference in Las Vegas, Oldenburg, who was appointed new head of digital-asset strategy this year, explained how the company is laying the groundwork to expand its digital asset business as client demand increases.
“It has been several years since we joined the broader digital asset space, and the regulatory environment has been more supportive of us,” Oldenburg said.
Oldenburg, who will speak at CoinDesk’s Consensus Miami conference this week, also said that US banks could eventually hold Bitcoin on their balance sheets. However, she pointed to a number of hurdles, such as the need for the Federal Reserve, Basel rules, and multiple global regulators, before a bank of Morgan Stanley’s scale could start putting Bitcoin on its balance sheet.
This is not the first time that a banking giant has said that banks will eventually move into the digital asset space. BNY CEO Robin Vince said in March that large financial institutions would drive the next phase of crypto adoption by serving as a bridge between traditional finance and digital assets. However banks need regulatory clarity before they can fully move forward in this area.
However, Morgan Stanley is not standing still and has already started its push into the digital asset sector, Oldenburg said. The banking giant recently launched MSBT, a Bitcoin-backed exchange-traded product and the first of its kind from a US-chartered bank. The product brought in more than $100 million in its first six days of trading.
Oldenburg said what made these flows particularly notable was that they came entirely from self-directed clients, with Morgan Stanley’s own financial advisors not even starting to offer the product yet.
“It was all self-directed, it wasn’t even available in advice on the money platform,” he said. This dynamics shows that there is significant demand for such products from customers.
Oldenburg said there is a significant gap between what advisors are offering clients and where the demand is. Oldenburg said Morgan Stanley recommends a 2%-4% Bitcoin allocation to clients, but the slow adoption among advisors is due to an education problem. He also said that 80% of ETP exposure on the wealth platform is self-directed and 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 more than $61 billion in assets, becoming the fastest-growing ETF in history since its launch in January 2024.
Additionally, Oldenburg said Morgan Stanley is pursuing an OCC Digital Trust Charter, which would allow the bank to directly custody crypto and offer spot crypto trading on its funding platform. The MSBT product itself uses Coinbase and BNY Mellon as dual custodians.
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