Bitcoin’s integration into U.S. bank balance sheets is anticipated by Morgan Stanley, though several obstacles remain, according to Amy Oldenburg, the bank’s digital asset strategy head. Addressing attendees at the Bitcoin Conference in Las Vegas, Oldenburg, who assumed her role this year, detailed how the firm is preparing for a broader expansion of its digital assets business as client interest grows.
“We’ve been active in the digital asset space for years, benefiting from a more supportive regulatory environment,” stated Oldenburg. She highlighted that U.S. banks might eventually hold bitcoin on their balance sheets but noted significant hurdles like Federal Reserve policies, Basel regulations, and the necessity for global regulatory consensus before a bank of Morgan Stanley’s stature could do so.
Oldenburg, also scheduled to speak at CoinDesk’s Consensus Miami conference this week, isn’t alone in her predictions. BNY CEO Robin Vince declared in March that major financial institutions would propel crypto adoption further by bridging traditional finance with digital assets, pending regulatory clarity.
Despite these challenges, Morgan Stanley is actively advancing into the digital asset realm. The bank recently introduced MSBT, a bitcoin-backed exchange-traded product and the first from a U.S.-chartered bank, which attracted over $100 million within its initial six trading days.
This influx was particularly notable as it came solely from self-directed clients, with Morgan Stanley’s financial advisors yet to offer the product. “All those funds were self-directed; it wasn’t even accessible through advisory on our wealth platform,” Oldenburg remarked, indicating strong client demand for such offerings.
Oldenburg noted a significant discrepancy between advisor recommendations and actual client demand. While Morgan Stanley suggests a 2%-4% bitcoin allocation to clients, slow adoption among advisors stems from educational gaps. She observed that 80% of ETP exposure on the wealth platform is self-directed and emphasized ongoing internal training programs aimed at equipping financial advisors with necessary knowledge.
The appetite for regulated bitcoin exposure is evident, as BlackRock’s IBIT has accumulated over $61 billion in assets since its January 2024 launch, becoming history’s fastest-growing ETF. Additionally, Oldenburg mentioned Morgan Stanley’s pursuit of an OCC digital trust charter to enable direct crypto custody and spot trading on its wealth platform. The MSBT product utilizes Coinbase and BNY Mellon as dual custodians.
Further Reading: Wall Street’s crypto push has been years in the making, according to Morgan Stanley.