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Morgan Stanley considers allowing brokers to recommend bitcoin ETFs to clients

The decision may be a response to growing investor interest in cryptocurrencies and the increasing acceptance of Bitcoin ETFs in the institutional world.

Date: 2024-04-25 Author: Marek Stiller
Morgan Stanley considers allowing brokers to recommend bitcoin ETFs to clients

Morgan Stanley, a leading financial institution, is reportedly exploring the possibility of expanding sales of Bitcoin ETFs, allowing its approximately 15,000 brokers to actively recommend these products to clients.

According to an AdvisorHub report, this potential move comes as the company looks to capitalize on the growing demand for cryptocurrency investments. Currently, Morgan Stanley offers Bitcoin ETFs without a solicitation, meaning clients must independently approach their advisors to express interest in investing.

By allowing advisors to actively recommend these products, the firm could potentially expand its client base, although it would also expose itself to additional liability.

Morgan Stanley establishes safeguards

Morgan Stanley is in the process of setting up some collateral, or “guardrails,” for the purchases ordered, according to the report, citing two senior executives familiar with the matter.

The measures would include requirements related to risk tolerance, allocation limits and transaction frequency. Executives did not give a specific timetable for when the company might implement these policy changes.

Morgan Stanley’s approach is in line with that of other firms in the industry. Other major banks, such as Bank of America’s Merrill Lynch and Wells Fargo, introduced Bitcoin ETFs shortly after receiving regulatory approval in January.

However, they also restricted access to unwanted purchases, and in some cases catered only to extremely wealthy customers. For example, Merrill Lynch set the minimum asset threshold at $10 million for clients interested in buying a Bitcoin ETF.

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Not all institutions offer cryptocurrency ETFs

In January, the Securities and Exchange Commission (SEC) approved 11 applications for Bitcoin ETFs, including those from BlackRock, Ark Investments, Fidelity, Invesco and VanEck. However, not all of these companies have made their Bitcoin ETFs available to investors.

Some financial institutions, such as Raymond James Financial and Vanguard, have decided not to offer cryptocurrency products, citing concerns about their suitability for long-term portfolios.

LPL Financial, the largest independent brokerage with more than 22,000 brokers, announced plans in February to evaluate which bitcoin funds it might offer clients. However, there is no official update on their progress.

Cetera Financial Group, another independent broker-dealer, approved four Bitcoin ETFs for its advisors in March. The firm introduced allocation limits and required clients to have an aggressive risk tolerance.

Although clients have shown strong interest in Bitcoin ETFs, a second Morgan Stanley director noted that they are still considered a speculative investment.

“Our clients are not betting the ranch on Bitcoin,” – said the director. “For most of these people, it’s quite interesting, so they put some money in.”

Meanwhile, Hong Kong is preparing to launch long-awaited ETFs on Bitcoin and Ethereum by the end of April .

The Hong Kong Securities and Futures Commission (SFC) recently gave approval to several fund managers to offer these ETFs in an effort to position itself as a hub for digital assets by launching a series of cryptocurrency ETFs.

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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