(Bloomberg) — Morgan Stanley is set to become the first Wall Street bank to launch its own Bitcoin-tracking exchange-traded fund, a milestone for the digital-asset ecosystem that underscores how deeply the original cryptocurrency has embedded itself in the financial mainstream — even as the market around it has cooled.
The New York–based firm plans to debut the Morgan Stanley Bitcoin Trust on NYSE Arca under the ticker MSBT Wednesday. It will join more than 10 spot-Bitcoin ETFs that launched over the past two years and collectively command over $85 billion in assets.
Despite being a late entrant to an increasingly crowded field, it’s leaning on a classic Wall Street playbook: competing on fees and scale.
With an expense ratio of 14 basis points, MSBT would be the cheapest fund in the category, undercutting Grayscale Investments Inc.’s BTC by 1 basis point and BlackRock Inc.’s IBIT by 11 basis points. The latter currently dominates the market, accounting for roughly 60% of total assets.
“We really wanted to show our commitment by having that lower fee,” Allyson Wallace, global head of ETFs at Morgan Stanley Investment Management, said in an interview. “The demand, especially from the high-net-worth investors, has been quite high. Viewed at the firm level, this is an asset class that is not going away.”
The launch underscores a broader shift in the Bitcoin market, where large institutions have become increasingly influential in driving trading volumes and shaping flows. Hedge funds, banks and other large investors are not only allocating to Bitcoin ETFs to meet client demand but are also using them as trading instruments. Since the debut of spot-crypto ETFs, regulatory filings consistently showed hedge funds, endowments and even government entities worldwide building exposure.
Eric Balchunas of Bloomberg Intelligence said the aggressive fee positioning signals strong demand from financial advisers. Morgan Stanley Wealth Management, which has about 16,000 advisers, recommended in November that clients allocate as much as 4% to Bitcoin.
“This gives them a fighting chance to gain organic buyers in the market,” the senior ETF analyst said.
Morgan Stanley has been laying the groundwork for years. In 2024, it began permitting its financial advisers to offer wealthy clients access to third-party Bitcoin ETFs, including IBIT and Fidelity Investments’ FBTC.
Retail demand is also a key focus. Younger investors are four times more likely to invest in crypto products than to own retirement accounts, according to a YouGov report. Wallace said the firm plans to launch its first targeted campaigns aimed at self-directed investors and will prioritize asset gathering once MSBT is approved across its wealth platforms.
The enthusiasm, though, masks a difficult reality in the underlying market. Bitcoin has fallen more than 40% from its October peak and a number of crypto analysts have pointed to various signals within the market that suggest a lack of demand, particularly from smaller retail investors.
With a slew of them sitting on paper losses, the buyer base that powered the product’s early success has turned into a source of inertia: reluctant to sell at a loss but equally unwilling to add exposure.
That dynamic has drained momentum. Spot-Bitcoin ETFs bled some $700 million over the past three months, data compiled by Bloomberg show. The risk for Morgan Stanley — and for the broader ETF complex — is that the next wave of buyers enters a market where the earlier ones are waiting to sell into any rally, capping the upside that drew them in.
Play Video
Still, both Wall Street firms and many institutional investors say the drawdown hasn’t shaken their core thesis. The capital flowing into Bitcoin ETFs was always meant for multi-year holding periods, not short-term trades — and Morgan Stanley’s willingness to launch a new fund into a down market is itself a signal that the biggest players see the current slump as a buying opportunity, not a reason to retreat.
The debut follows a regulatory shift in the US, where the Office of the Comptroller of the Currency allowed national banks to hold crypto assets on their balance sheets — if necessary — to facilitate blockchain-related activities. That change helped pave the way for Morgan Stanley’s ETF launch — an effort that involved roughly 200 employees across risk, compliance, legal, marketing and global financial-crimes teams, Wallace said. The firm is also exploring ETFs tied to Ether and Solana later this year.
“There were a lot of different hurdles that we needed to be able to work around,” Wallace said. “Now, there’s just been a lot more openness to just cryptocurrency assets and what they’re willing to see in the market.”
Coinbase Custody Trust Co. and Bank of New York Mellon will provide digital-asset custody services for MSBT.
© 2026 Bloomberg L.P.
