Banks Want Bitcoin on Their Balance Sheets — Here’s What’s Stopping Them

TLDR

• Morgan Stanley launched MSBT, a bitcoin-backed ETP, pulling in over $100 million in its first six days
• All inflows came from self-directed clients — financial advisors hadn’t even started offering the product yet
• Morgan Stanley recommends a 2–4% bitcoin allocation but says slow advisor uptake is an education problem
• The bank is pursuing an OCC digital trust charter to custody crypto directly and offer spot trading
• Bitcoin on U.S. bank balance sheets may come eventually, but Fed rules, Basel requirements, and global regulators stand in the way

Morgan Stanley’s new bitcoin exchange-traded product pulled in more than $100 million in under a week, before its own financial advisors had even begun selling it.

The product, called MSBT, is described as the first bitcoin-backed ETP issued by a U.S.-chartered bank. It launched recently and drew strong early interest entirely from self-directed clients on the bank’s wealth platform.

Amy Oldenburg, Morgan Stanley’s head of digital asset strategy, revealed the figures while speaking at the Bitcoin Conference in Las Vegas.

She was appointed to her current role earlier this year and is responsible for building out the bank’s digital asset business as client demand grows.

The Gap Between Clients and Advisors

Morgan Stanley officially recommends that clients allocate 2% to 4% of their portfolios to bitcoin. But advisor adoption of that guidance has been slow.

Oldenburg said the issue is education, not demand. Around 80% of ETP exposure on Morgan Stanley’s wealth platform is self-directed, meaning clients are making those choices without advisor input.

To fix this, the bank has launched internal training programs to help financial advisors better understand the asset class.

Morgan Stanley is also pursuing an OCC digital trust charter. This would allow the bank to hold crypto directly in custody and offer spot crypto trading through its wealth platform.

MSBT currently uses Coinbase and BNY Mellon as dual custodians.

Bitcoin on Bank Balance Sheets: Not Yet

Oldenburg said it is possible that U.S. banks will one day hold bitcoin on their own balance sheets. But she was clear that it is not happening soon.

She pointed to the Federal Reserve, Basel capital rules, and the need for alignment across multiple global regulators as key barriers.

BNY Chief Executive Robin Vince made similar comments in March, saying large financial institutions would drive the next phase of crypto adoption once regulatory clarity improves.

The broader market for regulated bitcoin products continues to grow. BlackRock’s IBIT has gathered more than $61 billion in assets since launching in January 2024, making it one of the fastest-growing ETFs on record.

The strong early numbers from MSBT suggest demand for regulated bitcoin exposure remains high, even as the more complex questions around balance sheet adoption remain unresolved.

Morgan Stanley’s MSBT uses Coinbase and BNY Mellon as dual custodians and currently sits outside the bank’s formal advisory channel.

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