Morgan Stanley expects bitcoin to hit the balance sheets of U.S. banks, although major hurdles remain, according to Amy Oldenburg, the bank’s head of digital assets strategy.
Speaking at the Bitcoin conference in Las Vegas, Oldenburg, who was named the new head of digital asset strategy this year, explained how the company is laying the groundwork for the expansion of its digital asset business as customer demand increases.
“We have been involved in the broader digital assets space for many years, and the regulatory environment has been more favorable to us in that sense,” Oldenburg said.
Oldenburg, who will speak at CoinDesk’s Consensus conference in Miami this week, also said that U.S. banks could eventually hold bitcoin on their own balance sheets. However, she pointed out several obstacles, such as the Federal Reserve, Basel rules and the need for multiple global regulators, before a bank the size of Morgan Stanley can begin putting bitcoin on its balance sheet.
This is not the first time a banking giant has stated that banks will eventually move further into the digital assets sector. BNY CEO Robin Vince said in March that large financial institutions would lead the next phase of crypto adoption by serving as a bridge between traditional finance and digital assets. But banks first need regulatory clarity before diving headlong into the sector.
However, Morgan Stanley is not standing still and has already begun to move into the digital assets space, Oldenburg said. The banking giant recently launched MSBT, an exchange-traded product backed by bitcoin and the first of its kind offered by a US chartered bank. The product generated over $100 million in its first six days of trading.
What made these influxes particularly striking was that they came entirely from self-directed customers; Morgan Stanley’s own financial advisors hadn’t even started offering the product yet, Oldenburg said.
“It was all self-managed, it wasn’t even available for advice on the heritage platform,” she said. This dynamic shows that there is significant customer demand for such products.
Oldenburg said there is a significant gap between what advisors are offering clients and where the demand is. While Morgan Stanley recommends a 2% to 4% bitcoin allocation to its clients, the slow adoption among advisors is due to an education issue, Oldenburg said. She also noted that 80% of ETP exposure on the wealth management platform is self-managed and that the bank has launched internal training programs to update financial advisors.
The appetite for regulated exposure to bitcoin is well established, with BlackRock’s IBIT amassing over $61 billion in assets, becoming the fastest growing ETF in history since its launch in January 2024.
Additionally, Oldenburg said Morgan Stanley is pursuing an OCC digital trust charter, which would allow the bank to directly hold crypto and offer spot cryptocurrency trading on its wealth platform. The MSBT product itself uses Coinbase and BNY Mellon as a dual custodian.
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