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 listed on bank balance sheets, but still need to overcome hurdles such as Federal Reserve regulations and Basel Accords. The bank is actively applying for digital trust licenses.

The official inclusion of Bitcoin into the banking system is moving from imagination to reality. Morgan Stanley’s Digital Asset Strategy Head Amy Oldenburg predicts that Bitcoin will inevitably appear on the balance sheets of major U.S. banks in the future, but there are still multiple obstacles to overcome.

Amy Oldenburg 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 for expanding its digital asset footprint. She said:

We have been deeply involved in the digital asset field for many years, and now the regulatory environment is more supportive than ever for us to showcase our capabilities.

Federal Reserve and International Regulations as Key Barriers

Amy Oldenburg also mentioned that U.S. banks may eventually include Bitcoin on their balance sheets, but for a bank of Morgan Stanley’s scale to start holding Bitcoin, several major hurdles must be cleared first, including the Federal Reserve’s stance, Basel Accords (global banking regulation standards), and gaining consensus and approval from multiple regulatory agencies worldwide.

In fact, the Wall Street giants optimistic about banks entering the crypto space are not limited to Morgan Stanley. Robin Vince, CEO of Bank of New York Mellon (BNY), stated in March this year that large financial institutions will serve as bridges between traditional finance and digital assets, leading the next wave of cryptocurrency adoption; however, he also emphasized that regulatory clarity remains the top priority before banks decide to “fully commit.”

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

Despite regulations still being refined, Morgan Stanley has not slowed down. Amy Oldenburg said the bank recently launched a Bitcoin spot ETF — “MSBT,” which is not only a major breakthrough for Morgan Stanley but also the first time a U.S. chartered bank has issued such a product.

Even more impressively, MSBT raised over $100 million in the first six trading days, with all funds coming from “active investments” by clients, even though Morgan Stanley’s own financial advisors have not yet begun recommending this product to clients.

Advisors Struggling to Keep Up with Client Demand, Internal Training Accelerated

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

She revealed that up to 80% of the ETP investment positions on Morgan Stanley’s wealth management platform are self-directed by clients. To address this, the bank has launched internal training programs to help financial advisors improve their skills.

The market’s demand for “compliant Bitcoin investment channels” is an undeniable fact. For example, BlackRock’s Bitcoin spot ETF “IBIT,” which launched in January 2024, has seen its asset size surge past $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 Morgan Stanley is actively applying to the Office of the Comptroller of the Currency (OCC) for a “Digital Trust Charter.”

Once approved, Morgan Stanley will be able to directly provide cryptocurrency custody services to clients and even open up spot trading of cryptocurrencies on its wealth management platform. Currently, the MSBT product adopts a dual-custody model, managed jointly by cryptocurrency exchange Coinbase and Bank of New York Mellon to ensure asset security.

• This article is reprinted with permission from: 《Block Guest》
• Original title: “Is the Fed the Final Boss? Morgan Stanley: 3 Obstacles to Bitcoin Inclusion in Bank Assets”
• Original author: Block Sister MEL