Simply put
- Amy Oldenburg, who heads digital asset strategy at Morgan Stanley, thinks that tokenized money market funds are a logical next step in the company’s cryptocurrency strategy.
- The investment bank, managing $9.3 trillion in client assets, might also look into tax-exempt recovery strategies for digital assets via its subsidiary, Parametric.
- With more than 15,000 wealth advisors, the firm recently gained the capability to market third-party spot Bitcoin ETFs to their eligible clients.
Morgan Stanley’s introduction of spot Bitcoin ETFs this Wednesday was a notable achievement for the firm, but it’s already looking ahead to future developments in cryptocurrencies.
The company filed for an ETF tracking Ethereum and Solana back in January, but Amy Oldenburg indicated that they won’t stop at Bitcoin. “We’re not going to stop at just Bitcoin,” she noted, mentioning that Morgan Stanley’s Spot Bitcoin ETF has gathered around $46 million in net inflows since its launch. “It’s actually a long-term journey, and there’s quite a long way to go.”
Last year marked a milestone as Morgan Stanley allowed its vast team of wealth advisors to market third-party spot Bitcoin ETFs, an initiative linked to products from Fidelity and BlackRock. Oldenburg suggests that the next steps could mimic what competitors are already doing.
She explained that tokenized money market funds are viewed as a “definite path forward” for the bank’s offerings, emphasizing the chances to develop digital representations of tangible assets in various asset classes.
Franklin Templeton started a high-yield token format to support U.S. Treasuries in 2021, but that was eventually supplanted by BlackRock’s BUIDL, currently valued at $2.3 billion. Meanwhile, Fidelity’s digital interest tokens have amassed a total value of around $172 million.
As for Parametric, it’s laid out several rules-based investment strategies for its clients. Oldenburg mentioned that assisting clients in offsetting capital gains tax using digital assets is something they are taking into account.
Other investment banks are signaling their own plans, having partnered with Zerohash for cryptocurrency trading through E*TRADE. Oldenburg noted that they are also contemplating Bitcoin-based yields and lending services.
While Morgan Stanley’s Bitcoin Trust may find it tough to eclipse BlackRock’s $53 billion Spot Bitcoin ETF, it is likely to experience growth nonetheless. Eric Balchunas, a senior ETF analyst at Bloomberg, remarked that it might create pressure on leading alternatives.
Balchunas also highlighted that Morgan Stanley’s ability to drive internal distribution and its competitive fee structure—set at 0.14%—could help it stand out amid fierce competition in the asset management space.
Oldenburg believes fee compression isn’t a new approach for the firm and that newly launched ETFs will probably act as commercial funnels over time. “We had an opportunity to really focus on how efficiently we could deliver that product from a rate perspective, rather than just trying to make money,” she remarked. “Now, let’s see more interesting products continue to be developed around this.”
