Morgan Stanley Sees Untapped Bitcoin Demand from US Banks

• Morgan Stanley’s digital assets head says that US banks cannot hold Bitcoin yet due to regulatory barriers and uncertain policies.
• Stanley became the first major US bank to launch its own Bitcoin ETF two weeks ago, drawing in $100 million in the first week.

US banks will hold Bitcoin directly on their balance sheets in the future, but the current regulatory environment will need to improve, says Amy Oldenburg, the head of digital assets at Morgan Stanley.

Oldenburg was part of a panel discussing institutional BTC adoption at the Bitcoin Conference in Las Vegas, where she discussed Morgan Stanley’s Bitcoin plans, the broader banking sector’s BTC adoption, and how policy has impacted uptake.

Oldenburg told the attendees that holding Bitcoin directly on banks’ balance sheets “is not out of the question.” However, lenders currently face major hurdles, starting with regulatory uncertainty. Currently, direct BTC holdings are restricted by the Federal Reserve and other global policies, including rules established by the Basel Committee on Banking Supervision.

Even if the US government permits BTC holdings, Morgan Stanley is a global institution and would need to align with dozens of other regulators, she added.

Morgan Stanley Goes All in on Bitcoin

Morgan Stanley has been one of Wall Street’s leaders in Bitcoin adoption, Oldenburg told the conference, adding:

Two weeks ago, it became the first major US bank to issue its own Bitcoin spot exchange-traded fund (ETF). Trading under the ticker MSBT, the ETF recorded $25 million in trading on its first day and by the end of the first week, had attracted $100 million in assets. Bloomberg ETF expert Eric Balchunas put it among the ‘top 1% of ETF launches.’

Oldenburg stated that this figure is even more impressive, given that all the assets came from self-directed accounts; the bank’s financial advisors have not yet begun offering the ETF.

Bitcoin ETFs have become one of the largest sectors in crypto. BlackRock dominates the sector, with its iBIT ETF holding over $60 billion in assets. Its European iShares ETF has also recently surpassed $1 billion and now holds over 14,000 BTC.

Morgan Stanley advises its clients to allocate 2%-4% of their assets in Bitcoin, with Oldenburg revealing that the bank is keen to insist on BTC, not just any crypto. She added that the bank is investing heavily in education to create awareness about how diversifying portfolios with BTC could reap dividends for their clients, and how Bitcoin is different from other cryptos.

Beyond Bitcoin, the investment bank is expanding its reach into stablecoins. Two weeks ago, it launched the Stablecoin Reserves Portfolio, a money market fund for stablecoin issuers that aligns them with the requirements for the GENIUS Act.

Commenting on the new fund, Oldenburg stated:

Bitcoin trades just below $80,000 at press time, rising 2% in the past day as trading volume recovered from the weekend slump and surged 110% to $34 billion.

The post Morgan Stanley Sees Untapped Bitcoin Demand from US Banks appeared first on ETHNews.