Morgan Stanley expects bitcoin to make its way onto U.S. bank balance sheets at some point, though large banks are not there yet. Speaking at the Bitcoin Conference in Las Vegas, the firm’s head of digital asset strategy, Amy Oldenburg, said the move is likely in time, but major regulatory barriers still need to be cleared first.
Oldenburg, who took on the digital-asset strategy role this year, said Morgan Stanley has been active in the broader digital asset sector for years and is now preparing for a wider expansion as client demand builds. She said the regulatory backdrop has become more supportive for the bank’s activity in the space.
Federal Reserve and Basel Rules Remain Major Obstacles
According to Oldenburg, U.S. banks may eventually hold bitcoin on their own balance sheets, but that outcome depends on more than internal appetite. She pointed to the Federal Reserve, Basel rules, and the need for coordination across multiple global regulators as key constraints before an institution the size of Morgan Stanley could begin carrying bitcoin directly on its balance sheet.
The view is not unique to Morgan Stanley. In March, BNY CEO Robin Vince said large financial institutions would drive the next phase of crypto adoption by acting as a bridge between traditional finance and digital assets. He also said banks need clearer regulation before making a full commitment to the sector.
MSBT Drew More Than $100 Million in Six Trading Days
While direct balance-sheet exposure remains out of reach, Morgan Stanley has already moved ahead with client-facing digital asset products. Oldenburg said the bank recently launched MSBT, a bitcoin-backed exchange-traded product and the first offering of its kind from a U.S.-chartered bank. The product brought in more than $100 million during its first six trading days.
Oldenburg said those inflows were especially notable because they came entirely from self-directed clients. Morgan Stanley’s own financial advisors had not yet started offering the product through advisory channels on the wealth platform. All of the early demand came from clients placing trades on their own, giving the bank a direct signal that interest in this type of exposure is already present.
Advisors Trail Client Demand on Bitcoin Allocation
Oldenburg said there is a clear gap between what advisors are currently offering and where clients want exposure. Morgan Stanley recommends a 2% to 4% bitcoin allocation for clients, but advisor adoption has been slower than expected. She said the issue is education rather than a lack of demand.
On Morgan Stanley’s wealth platform, 80% of ETP exposure is self-directed, according to Oldenburg. To close that gap, the bank has started internal training programs aimed at helping financial advisors get up to speed on digital asset products and how they fit into portfolio construction.