Morgan Stanley allows its brokers and advisors to pitch Bitcoin ETF as investments but with strict “guardrails” in place.
In the latest development, banking giant Morgan Stanley stated that it would allow its 15,000 brokers to distribute the newly introduced spot Bitcoin ETF funds. Ever since their inception in January 2024, Morgan Stanley has been offering its clients exposure to spot Bitcoin ETFs, however, on an unsolicited basis.
Thus, it was only available when the customers approached the advisors about investing in Bitcoin ETF. However, the bank’s 15,000 brokers and advisors will be now able to recommend the product. Banking giant Morgan Stanley stated that they are still working on “guardrails” for all solicited purchases.
One of the executives at Morgan Stanley told AdvisorHub that these guardrails include risk tolerance requirements as well as limits on trading frequency and allocation. The executive said:
“We’re going to make sure that we’re very careful about it. We are going to make sure everybody has access to it. We just want to do it in a controlled way.”
Morgan Stanley’s peers have adopted a similarly cautious stance. Following regulatory approval, Bank of America’s Merrill Lynch and Wells Fargo introduced Bitcoin ETFs, however, limited to unsolicited purchases and, in some instances, exclusive to high-net-worth clients. For instance, Merrill requires clients to possess at least $10 million in assets to invest in a Bitcoin ETF.
An internal source revealed that Raymond James Financial does not offer cryptocurrency products on its platform. Similarly, Vanguard has refrained from embracing crypto products, asserting in a January blog post that it does not view them as suitable for inclusion in long-term investment portfolios.
More Brokers Join Hands to Offer Bitcoin ETFs
One of the largest independent brokerage firms LPL Financial noted that they would be taking three months to determine which Bitcoin funds to offer to its customers. Last month in March, independent broker Cetera Financial Group approved four Bitcoin ETFs for its advisors to pitch to customers along with providing training and education for using these products.
The firm has placed allocation limits along with aggressive risk tolerance for its customers. Matt Fries, head of investment products at Cetera, said:
“We will continue to proactively evaluate the implications of Bitcoin ETFs and related products and modify our policies accordingly, and we look forward to partnering with our financial professionals to adopt Bitcoin ETFs when appropriate with their clients.”
Another Morgan Stanley executive noted that despite customers displaying significant interest in Bitcoin ETFs, it is still perceived as a speculative investment. “Our clients aren’t betting the ranch on Bitcoin. For most of those people, it’s quite interesting, so they put in a little bit of money,” the executive said.
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