Morgan Stanley has told its advisers in the US that they can recommend bitcoin ETFs to select clients in a change of policy.
According to CNBC, the firm is the first of the major US wealth management businesses to allow the option for its advisers, which total around 15,000.
The selected funds are the BlackRock iShares Bitcoin Trust and the Fidelity Wise Origin Bitcoin Fund, both of which were approved by the Securities and Exchange Commission (SEC) at the start of the year.
Until this point, advisers could only discuss the product if actively asked by their client, and it is understood that other major wealth managers such as Bank of America and Goldman Sachs still have this policy in place. This is because of the volatile nature of the product and the lack of strict regulation and transparency around it.
On the other hand, Morgan Stanley said it has made the move in response to client demand and in an attempt to evolve in a market where the products are gaining popularity, CNBC said.
However, it is not a universal move for all clients as Morgan Stanley has imposed limits such as the products only being recommended to clients with a net worth of US$1.5 million or above ($2.3 million), an aggressive risk tolerance, and a willingness to make speculative investments.
They are also unsuitable to be held in clients’ retirement accounts. Morgan Stanley will monitor the assets to ensure clients don’t end up with an overexposure to cryptocurrency.
In January, the SEC approved the listing and trading of multiple spot bitcoin exchange-traded products for the first time. Announced by SEC chairman Gary Gensler, 11 spot bitcoin ETFs were deemed effective for listing and trading on Cboe, the New York Stock Exchange and Nasdaq.
While the US regulatory body previously disapproved of the digital asset class in the past, Gensler described that approving bitcoin ETFs is the “most sustainable path forward”.
However, Gensler warned: “Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion and terrorist financing.”
