In a bid to capitalize on the surging demand for cryptocurrency investments, Morgan Stanley is reportedly considering expanding its sales of Bitcoin exchange-traded funds (ETFs) by empowering its 15,000 brokers to actively endorse these products to clients.
Currently, the financial giant offers Bitcoin ETFs on an unsolicited basis, requiring customers to initiate discussions with their advisors independently. However, this potential shift would see advisors proactively recommending these products, potentially broadening the firm’s customer base while also exposing it to additional liability, as per a report from AdvisorHub.
Establishing Safeguards for Investors
Morgan Stanley is in the process of establishing safeguards, or ”guardrails,” for solicited purchases, according to sources familiar with the matter. These measures would encompass requirements related to risk tolerance, allocation limits, and trading frequency. However, specific details regarding the implementation timeline remain undisclosed.
Embracing Industry Trends
The move mirrors strategies adopted by peers in the industry, such as Bank of America’s Merrill Lynch and Wells Fargo, which introduced Bitcoin ETFs shortly after their regulatory approval in January. However, access to these products has been limited, with some institutions catering exclusively to ultra-wealthy clients and imposing minimum asset thresholds.
Varied Approaches Among Financial Institutions
While the Securities and Exchange Commission (SEC) approved 11 applications for Bitcoin ETFs in January, not all firms have made these products available to investors. Some, like Raymond James Financial and Vanguard, have opted out, citing concerns about the suitability of cryptocurrencies for long-term portfolios.
Continued Interest Amid Caution
Despite significant interest in Bitcoin ETFs, they are still considered speculative investments by many. A Morgan Stanley executive noted that most clients view them as ”quite interesting” but are not making substantial investments. Instead, they are allocating smaller sums as part of a diversified portfolio strategy.
Featured image from: cryptoslate.com