(Kitco News) – The outlook for Bitcoin (BTC) exchange-traded funds (ETFs) improved on Friday as a report from CNBC notes that Morgan Stanely, the largest wealth manager in the United States, will allow its 15,000 financial advisers to start recommending the ETFs to clients beginning August 7.
The decision makes Morgan Stanley the first among the major Wall Street banks to have their financial advisors pitch the ETFs to clients. Crypto proponents are hopeful it will kick off a trend that opens the door to trillions of dollars of stored wealth being able to start making its way into Bitcoin and the wider crypto market.
People with knowledge of the policy told CNBC that the firm’s advisors will recommend eligible clients buy shares of two of the leading BTC ETFs: BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC).
Data provided by amberLens shows that IBIT currently holds 340,341 BTC valued at $22.2 billion, while FBTC holds 193,741 BTC valued at $12.6 billion.
Morgan Stanley advisors will recommend only these two products for the time being as the other spot crypto ETFs, including the recently launched Ethereum ETFs, have not yet been approved by the bank.
Sources told CNBC that Morgan Stanley decided to support the BTC ETFs in response to “aggressive demand” from clients and in an attempt to follow an evolving marketplace for digital assets.
However, the firm is adopting a cautious approach to supporting the products and will only pitch them to clients with a net worth of at least $1.5 million who desire to make speculative investments and have a high risk tolerance, the sources said. Only taxable brokerage accounts, and not retirement accounts, are eligible.
One source said the bank will also monitor clients’ crypto holdings to make sure they don’t end up with excessive exposure to the volatile asset class.
This development marks an important milestone for the cryptocurrency community as most of the world’s largest financial advisory firms, known as wirehouses, have yet to embrace spot crypto ETFs and promote them to their clients.
Of all the wirehouses, Morgan Stanley is the largest. The firm's advisory network oversees $3.75 trillion in assets under management, including $1 trillion in self-directed client accounts. Data provided by financialplanning.com shows Morgan Stanley manages $6.2 trillion across all of its banking units.
Market watchers are now closely monitoring to see if other names on the list, including JPMorgan Chase, Bank of America, and Wells Fargo, follow suit and start pitching the ETFs to their clientele.
Inflows into the ETFs have waned in recent months as the established crypto userbase maximized their investments or opted to hold the real thing, meaning future gains will rely on new investors coming into the market.
Wirehouse financial advisors are known to be some of the best financial product salespeople on the planet, and it is widely expected that once they start to sell BTC ETFs to their clients, inflows will surge, along with Bitcoin’s price.
Kyle DaCruz, director of digital asset products for VanEck, said in an interview with CoinTelegraph that with trillions of dollars under management, gaining the support of wirehouses represents “a game changer” for the digital asset ecosystem.
BitGrow Lab founder Vivek Sen posted the following tweet that summarized the general mood and outlook of the crypto community following the announcement.
?? Morgan Stanley to let 15,000 brokers recommend #Bitcoin ETFs.
This is HUGE ? pic.twitter.com/MBx4WEZXFl— Vivek⚡️ (@Vivek4real_) August 2, 2024
