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Morgan Stanley has introduced its bitcoin exchange-traded product, the Morgan Stanley Bitcoin Trust (MSBT), to a market it perceives as still being in its nascent stages.
During a panel discussion on Wednesday, moderated by Tyler Evans, Amy Oldenburg, the bank’s lead for digital assets, dedicated nearly an hour to advocating for bitcoin. She noted that few clients have heard her full argument and stated that this educational deficit represents the industry’s most pressing challenge.
“We must begin with bitcoin,” Oldenburg stated to the attendees, highlighting the asset’s approximate market capitalization of $1.5 trillion and its significant separation from the broader cryptocurrency ecosystem.
She was careful to distinguish bitcoin from cryptocurrency as a general classification, a distinction she mentioned that most individual and institutional clients still do not confidently differentiate. The firm desires this distinction to be grounded in fundamental analysis, not solely in prevailing narratives.
Oldenburg: Bitcoin faces an educational hurdle
She indicated that the educational challenge is profound. Numerous investors still connect bitcoin with its early days of use by illicit actors and find it difficult to look beyond that perception when considering an investment.
Oldenburg mentioned that when clients inquire about yield or structured investment options, her team endeavors to be transparent: “You can present it as yield, but the underlying asset is bitcoin.” She added that this clarity is still lacking in most market discussions, and there is “much more work to be done.”
MSBT garnered over $100 million in its initial week of trading, signaling a strong early performance for a product the bank positions as catering to its entire client base rather than a select few.
However, Oldenburg promptly provided context for this figure. All initial investments were made through self-directed accounts, as the fund had not yet been accessible via the advisory platform.
She pointed out that the bank has advised a 2-4% cryptocurrency allocation, and even with this guidance, adoption through advisors has been gradual. She reminded the audience that the product has been available for less than a year.
To address this gap, Morgan Stanley is employing an internal strategy. Oldenburg stated that the firm is implementing internal training to equip financial advisors to discuss bitcoin confidently with clients, and her team dedicates “hour after hour after hour” to phone consultations, guiding clients through models and allocation strategies.
She mentioned that the bank develops products for clients with diverse requirements and aims to serve all these needs through its platform, including clients seeking a direct ETP structure, and that spot cryptocurrency trading will soon be available for those on the wealth management side.
Regarding custodianship, Oldenburg acknowledged the complexities involved in the decision. The market offers numerous providers, and selecting among them was not simple, leading the firm to collaborate with more than one. Morgan Stanley ultimately appointed Coinbase and BNY Mellon as custodians for MSBT.
When the discussion shifted to high-risk bitcoin investments, Oldenburg referred to Strategy, the company formerly known as MicroStrategy led by Michael Saylor, as “a good friend of Morgan Stanley,” and stated that the bank has collaborated with it throughout its development.
She noted that most of the investment in that vehicle to date originates from retail investors and that “digital credit” as a category will require time to mature.
Morgan Stanley investing in bitcoin is “not out of the question”
Addressing the possibility of banks holding bitcoin on their balance sheets, Oldenburg indicated it is “not out of the question” contingent on regulatory advancements, but she framed it cautiously.
She stated that the U.S. requires greater consistency among its financial regulators, and for a global entity like Morgan Stanley, the situation is even more intricate, with each regulatory jurisdiction presenting its own set of rules.
She concluded by reiterating her initial point: the necessity for research with broad reach. The market includes trusted commentators and personalities that investors follow, she said, and the task ahead involves bringing this type of accessible, well-supported analysis into the mainstream.
“We are still at a very early stage of this journey,” she remarked. “Such a small allocation. It is still very early.”
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Micah ZimmermanMicah first encountered Bitcoin in 2018 but remained hesitant for an extended period. Since 2021, he has covered cryptocurrency and business and currently works as a news reporter for Bitcoin Magazine, based in North Carolina.RELATED ARTICLES NEWS
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Original article : bitcoinmagazine.com