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

The head of Morgan Stanley expects Bitcoin to enter banks’ balance sheets. However, it still needs to clear hurdles such as the Federal Reserve’s regulations and the Basel Accords. The firm is actively applying for a digital trust license.

Bitcoin has officially started to move from imagination to reality in the banking system. Amy Oldenburg, Head of Digital Asset Strategy at Morgan Stanley (Morgan Stanley), expects that in the future Bitcoin will definitely appear on the balance sheets of major U.S. banks. But for now, there are still multiple hurdles to overcome.

Amy Oldenburg recently revealed at the Bitcoin Conference held in Las Vegas that as client demand continues to heat up, 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 years, and now the regulatory environment is also more supportive than ever for us to really show what we can do.

Key obstacles: the Federal Reserve and international regulations

Amy Oldenburg also noted that U.S. banks may ultimately include Bitcoin on their own balance sheets. However, for banks at a scale like Morgan Stanley to begin holding Bitcoin, they first need to clear several major hurdles, including the Federal Reserve’s stance, the Basel Accords (Basel Accords, global standards for bank regulation), and the need to reach consensus and receive approvals from multiple regulators worldwide.

In fact, there are more than just Morgan Stanley among Wall Street heavyweights who believe the banking industry will move into the crypto space. Robin Vince, CEO of BNY Mellon Bank (BNY), said in March this year that large financial institutions will play the bridge between traditional finance and digital assets, leading the next wave of mainstream crypto adoption. But he also emphasized that before banks decide to “fully commit,” regulatory clarity remains the primary prerequisite.

Morgan Stanley’s MSBT goes live and raises more than $100 million in 6 days

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

Even more striking is that in the first 6 trading days after its launch, MSBT pulled in more than $100 million, and all the funds came from clients’ “active investments.” Morgan Stanley’s own wealth management advisors have not even started recommending this product to clients yet.

Advisors can’t keep up with client demand—internal training is speeding up

Amy Oldenburg pointed out that there is a clear gap between the products wealth management advisors provide to clients and clients’ actual needs. Although Morgan Stanley recommends that clients allocate 2% to 4% of their assets to Bitcoin, the promotion pace is clearly 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 from clients’ self-directed trading. To that end, 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 undisputed fact. For example, consider the Bitcoin spot ETF “IBIT” issued by asset management giant BlackRock. Since it launched in January 2024, its assets under management have surged to exceed $61 billion, setting a record for the fastest-growing ETF in history.

Next step: OCC digital trust license to enable direct custody and spot trading

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

Once approved, Morgan Stanley would be able to directly provide crypto custody services to clients, and it could even open crypto spot trading on its own wealth management platform. As for the current MSBT product, it will initially adopt a dual-custody model, handing asset security jointly to the crypto exchange Coinbase and BNY Mellon Bank.

• This article is reproduced with permission from: 《BlockBeats》
• Original title: 《Is the Fed the final boss? Morgan Stanley: “3 hurdles” for Bitcoin to be included in bank balance sheets》
• Original author: BlockBeats MEL