Morgan Stanley Enables Crypto-to-ETF Conversions for Wealth Clients
Morgan Stanley Wealth Management will allow eligible clients to convert digital assets into spot cryptocurrency exchange-traded products (ETPs), through a new partnership with Galaxy Digital, an online private markets provider.
The new model is designed for high-net-worth clients who want to trade crypto assets for traditional investment products like exchange-traded funds (ETFs). Among the products that clients can trade a digital asset for is the recently launched Morgan Stanley Bitcoin Trust, the wealth manager’s ETF product with exposure to spot crypto.
Under the partnership, a Morgan Stanley Wealth Management client would lend a specific digital asset, like Bitcoin, Ethereum, or Solana, to Galaxy. Once Galaxy confirms it can swap the product, it will transfer ETP shares over to the client.
These types of transactions can significantly improve onboarding times and may reduce wait periods by as much as 75%, the two partners say.
“Morgan Stanley has been investing in the DeFi space for some time, and we are proud to support a referral capability with Galaxy to provide Wealth Management clients with an institutionalized pathway that helps integrate digital assets into their portfolio,” said Alison Nest, head of Investment Solutions Products at Morgan Stanley Wealth Management, in a statement. “This referral arrangement represents a significant step forward in bridging traditional finance and decentralized finance, providing more investors with streamlined opportunities to diversify.”
Galaxy will also shrink its lending transaction minimum for Morgan Stanley clients, from $25 million to $5 million, in order to expand access to eligible clients.
“We are excited to support referrals from Morgan Stanley Wealth Management to offer an efficient and secure path to access spot crypto ETPs,” added Zane Glauber, global head of Distribution at Galaxy. “Streamlined onboarding and lowered transaction minimums make it easier for clients to integrate digital assets alongside traditional investments, supporting a holistic approach to wealth management.”
The partnership is Morgan Stanley’s latest venture into cryptocurrency. Last October, the firm expanded crypto investing to all client accounts, including retirement plans and individual retirement accounts (IRAs). Morgan Stanley previously only offered crypto investing to clients in taxable brokerage accounts with aggressive risk tolerances and who held over $1.5 million in assets.
An influx of Wall Street mega-firms, including Goldman Sachs and BlackRock, are welcoming digital assets into their platforms and services as regulation on cryptocurrencies relaxes.
Other organizations are quickly embracing digital currencies as the financial services industry awaits final regulation on private markets from the Department of Labor (DOL). The proposed rule, which came out in early March, would expand access to digital assets by allowing plan sponsors to offer the funds in retirement portfolios.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news.