Morgan Stanley is considering expanding its sales of Bitcoin exchange-traded funds (ETFs) by allowing its brokers to actively recommend the products to customers. Currently, the firm only offers Bitcoin ETFs on an unsolicited basis, but enabling advisors to actively recommend them could potentially broaden its customer base. However, this move would also expose the firm to additional liability, so Morgan Stanley is in the process of establishing safeguards for solicited purchases. These safeguards would include requirements related to risk tolerance, limits on allocation, and trading frequency, although no specific timeline has been provided for when these policy changes might be implemented.
This strategy by Morgan Stanley aligns with that of other major banks in the industry, such as Bank of America’s Merrill Lynch and Wells Fargo, who introduced Bitcoin ETFs shortly after their regulatory approval in January. However, these banks also limited access to unsolicited purchases and in some cases, exclusively catered to ultra-wealthy clients. Not all financial institutions offer cryptocurrency ETFs, with some institutions choosing not to offer these products due to concerns about their suitability for long-term portfolios. In January, the Securities and Exchange Commission approved 11 applications for Bitcoin ETFs, but firms like Raymond James Financial and Vanguard have not made their Bitcoin ETFs available to investors.
LPL Financial, the largest independent brokerage, announced plans in February to evaluate which Bitcoin funds it could offer to customers, but there has been no official update on their progress. Another independent broker-dealer, Cetera Financial Group, approved four Bitcoin ETFs for its advisors in March, implementing allocation limits and requiring customers to have aggressive risk tolerances. While customers have shown considerable interest in Bitcoin ETFs, it is still regarded as a speculative investment by many. A second executive from Morgan Stanley mentioned that their clients are not heavily investing in Bitcoin, but rather putting in small amounts of money as an interesting opportunity.
In Hong Kong, the Securities and Futures Commission has recently granted approval to several fund managers to offer spot Bitcoin and Ethereum ETFs by the end of April. This move aims to establish Hong Kong as a hub for digital assets by introducing a range of cryptocurrency ETFs. The approval of these ETFs in Hong Kong comes as the demand for cryptocurrency investments continues to rise globally. Morgan Stanley and other financial institutions are recognizing this growing demand and are considering ways to tap into the cryptocurrency market to provide investment opportunities to customers. The implementation of Bitcoin ETFs in Hong Kong further showcases the increasing acceptance and mainstream adoption of digital assets in the financial industry.
