Morgan Stanley: If Bitcoin is to be included in bank assets, there are still "three hurdles" to overcome

Morgan Stanley executives expect Bitcoin to be added to bank balance sheets, but there are still hurdles to clear, including Federal Reserve rules and the Basel Accords. The firm is actively applying for digital trust licenses.

Bitcoin’s formal inclusion in the banking system is moving from imagination to reality. Amy Oldenburg, Head of Digital Asset Strategy at Morgan Stanley, expects that Bitcoin will inevitably appear on the balance sheets of major U.S. banks in the future, but for now there are still multiple hurdles that need to be overcome.

Amy Oldenburg recently revealed at the Bitcoin Conference held in Las Vegas that, as customer demand continues to rise, this Wall Street investment bank is actively paving the way to expand its digital asset footprint. She said:

We’ve been deeply involved in the digital asset space for many years, and now the regulatory environment is even more supportive than ever, enabling us to showcase what we can do.

Federal Reserve and International Regulations as Key Barriers

Amy Oldenburg also noted that U.S. banks may ultimately include Bitcoin on their own balance sheets, but for a bank at a scale like Morgan Stanley to begin holding Bitcoin, several major hurdles must be cleared first. These include the Federal Reserve’s stance, the Basel Accords (global banking regulatory standards), and the need to reach consensus and obtain approval from multiple regulatory bodies worldwide.

In fact, Wall Street leaders who are bullish on banks entering the crypto space are not limited to Morgan Stanley. Robin Vince, CEO of BNY Mellon (BNY), said as early as March this year that large financial institutions will play a bridge role between traditional finance and digital assets, leading the next wave of mainstream crypto adoption. However, he also emphasized that regulatory clarity remains the top prerequisite before banks decide to “fully commit.”

Morgan Stanley MSBT Listed for 6 Days, Raising Over $100 Million

Even though regulations are still being refined, Morgan Stanley has not stalled. Amy Oldenburg said the firm recently launched a Bitcoin spot ETF—“MSBT.” This is not only a major breakthrough for Morgan Stanley, but also the first time a U.S. chartered bank has issued a product of this type.

Even more impressive is that before MSBT even began trading, it attracted more than $100 million within its first 6 trading days, and all the funds came from customers’ “active investments.” Morgan Stanley’s own wealth management advisors hadn’t even started recommending the product to clients.

Advisors Can’t Keep Up with Client Demand, Internal Training Accelerates

Amy Oldenburg pointed out that there is a clear gap between the products wealth management advisors offer to clients and clients’ actual needs. Although Morgan Stanley advises clients to allocate 2% to 4% of their assets to Bitcoin, the pace of promotion is obviously lagging, mainly due to insufficient education and training.

She revealed that on Morgan Stanley’s wealth management platform, as much as 80% of ETP investment positions are based on clients’ own trading. To address this, the firm has launched an internal training program to help wealth management advisors improve their skills.

Market demand for “compliant Bitcoin investment channels” is already an indisputable fact. Take “IBIT,” the Bitcoin spot ETF issued by asset management giant BlackRock, for example. Since it launched in January 2024, its assets under management have surged to over $61 billion, setting a remarkable record as the fastest-growing ETF in history.

Next Step: OCC Digital Trust License to Enable Direct Custody and Spot Trading

Looking ahead, Amy Oldenburg said Morgan Stanley is currently actively applying to the Office of the Comptroller of the Currency (OCC) for a “Digital Trust Charter.”

If approved, Morgan Stanley will be able to provide cryptocurrency custody services directly to clients, and even open up spot trading of cryptocurrencies on its own wealth management platform. As for the current MSBT product, it will first adopt a dual-custody model, entrusting asset security management to both the cryptocurrency exchange Coinbase and BNY Mellon.

• This article is reprinted with authorization from: 《Block Beast》
• Original title: 《Is the Fed the Final Boss? Morgan Stanley: 3 Barriers to Bitcoin Inclusion in Bank Assets》
• Original author: Block Sister MEL