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 still need to overcome hurdles such as Federal Reserve regulations and Basel Accords. The bank is actively applying for digital trust licenses.

The formal integration of Bitcoin into the banking system is moving from imagination to reality. Amy Oldenburg, Morgan Stanley’s head of digital asset strategy, predicts that Bitcoin will inevitably appear on the balance sheets of major U.S. banks in the future, but there are still many obstacles to overcome.

Recently, at the Bitcoin Conference held in Las Vegas, Amy Oldenburg revealed 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

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

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

Morgan Stanley’s MSBT Listed for 6 Days, Raises Over $100 Million

Despite ongoing regulatory developments, Morgan Stanley has not slowed down. 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 impressive, 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

Oldenburg pointed out that there is a clear gap between the products financial advisors offer and the actual needs of clients. Although Morgan Stanley recommends clients allocate 2% to 4% of their assets to Bitcoin, the promotion pace is 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 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,” 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, 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, with assets jointly managed by cryptocurrency exchange Coinbase and BNY Mellon to ensure security.

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