- These Bitcoin investments were likely made on behalf of clients, not as a speculative move by the investment bank.
- Other major banks, such as JPMorgan, Wells Fargo, and UBS, also reported holdings in spot Bitcoin ETFs during the first quarter.
Morgan Stanley recently disclosed substantial holdings in Bitcoin exchange-traded funds (ETFs). As of March 31, the investment bank held nearly $270 million worth of Grayscale’s Bitcoin Trust, reflecting a growing interest in cryptocurrency among institutional investors.
This information, disclosed in a 13F filing, highlights the bank’s substantial allocation to Bitcoin-related assets. Notably, Morgan Stanley’s Bitcoin investments were likely executed on behalf of clients. Morgan Stanley is not alone in this trend. Other major banks, including JPMorgan, Wells Fargo, and UBS, also revealed holdings in spot Bitcoin ETFs during the first quarter.
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Outflows Driven By High Fees
Morgan Stanley’s approach to Bitcoin ETF allocations has been notably cautious. The bank started offering spot Bitcoin ETF allocations to its clients following their approval in January. However, these investments were only made on an unsolicited basis, meaning that clients had to initiate the request, reflecting a demand-driven strategy rather than a proactive investment by the bank.
Since its conversion to an ETF, GBTC has experienced $17.46 billion in outflows during the second week of this month, Reuters reported. The higher fees compared to rival funds and the wave of bankruptcies within the crypto industry contributed to these withdrawals. Companies that faced financial collapse over the past two years withdrew funds from GBTC to repay creditors, exacerbating the outflow trend.
GBTC’s dominance as the largest spot Bitcoin ETF by assets under management is now challenged by BlackRock’s iShares Bitcoin Trust (IBIT). IBIT manages $16.91 billion, closely trailing GBTC. This competition adds pressure on Grayscale to maintain its leading position in the market.
In an effort to address the high fees and maintain investor interest, Grayscale announced plans in March to seek approval from the Securities and Exchange Commission for a new, lower-fee Bitcoin Mini Trust. Although the exact fees for this Mini Trust are yet to be decided, the move indicates Grayscale’s strategy to offer more competitive products in the market.
