US bank Morgan Stanley to launch three Bitcoin funds

Morgan Stanley will soon launch two Bitcoin-focused funds as demand for cryptocurrencies picks up among institutional clients, reported business outlet CNBC on Thursday, citing two people with knowledge of the matter.

The bank has, so far, remained wary of introducing crypto services or implementing tools that aid the adoption and use of the asset class. However, the recent run of Bitcoin and an overall favorable environment for cryptocurrencies seems to have changed that tune.

Moving into Bitcoin

As per the report, Morgan Stanley told advisors in an internal memo that it would soon launch access to three funds that allow investors to gain exposure to Bitcoin. The move would be part of the bank’s $4 trillion wealth management business.

Morgan Stanley is the first bank to offer #Bitcoin, they won’t be the last.

“The move, a significant step for the acceptance of bitcoin as an asset class, was made by Morgan Stanley after clients demanded exposure to the cryptocurrency”https://t.co/RCHZVa7YDN

— Michael Saylor (@michael_saylor) March 17, 2021

The bank said clients “demanded” for such services to be made available, buoyed by the asset’s rally from under $5,000 last year to over $58,000 at the time of this writing. Accredited investors in the US do not have many avenues to trade Bitcoin—apart from regulated exchanges like Coinbase and Gemini or via institutional funds like Grayscale.

Such services are still new in the minds of traditional investors or those seeking to trust a legacy brand instead. And this is where Morgan Stanley’s expertise and brand would come in.

Out of the three funds on offer, two would be from Galaxy Digital, the crypto firm founded by Mike Novogratz. Another would be a joint effort from asset manager FS Investments and Bitcoin company NYDIG.

Of those, the Galaxy Bitcoin Fund LP and FS NYDIG Select Fund have minimum investment criteria of $25,000, while the Galaxy Institutional Bitcoin Fund LP works with minimum criteria of $5 million.

Galaxy is thrilled to partner with Morgan Stanley, the first US bank to offer Wealth Management clients access to bitcoin funds. https://t.co/xT2SYHPOkJ

— Mike Novogratz (@novogratz) March 17, 2021

Not for everyone

The funds are expected to be available to clients as early as next month. Morgan Stanley advisors are said to be undergoing training in this regard to help investors with understanding the opportunities (and cons) that investing in Bitcoin would present.

But don’t think just about anyone can go buy Bitcoin via Morgan Stanley just yet. The bank, as per the report, is said to only be considering people with “an aggressive risk tolerance” for the Bitcoin pitch—and they need to have at least $2 million in assets held by the firm. The accounts, in addition, have to be at least 6 months old.

And even for legally-recognized “accredited” investors in the US that meet both the investment and the brokerage criteria, Morgan Stanley would limit all Bitcoin investments to just 2.5% of their net worth. Not exactly permissionless finance if you were to ask.