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Morgan Stanley's Wealthy Clients Can Tap Into Bitcoin - Report

Tom Burroughes, Group Editor, 19 March 2021

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The report is an example - if confirmed - of how large financial institutions are getting more heavily into the digital assets story.

Morgan Stanley is reportedly the first large US bank to offer its wealth management clients access to bitcoin funds, adding to a growing drumbeat of noise signifying that digital assets are going mainstream.

The firm, with $4 trillion in client assets, told its financial advisors earlier this week in an internal memo that it is launching access to three funds that enable ownership of bitcoin, CNBC reported citing unnamed sources.

The US firm made the move because clients had demanded it, the report said. Morgan Stanley is, however, only allowing its wealthier clients to tap into the sector and it considers bitcoin suitable for people with “an aggressive risk tolerance,” who have at least $2 million in assets held by the firm. And even for those accredited US investors with brokerage accounts and enough assets to qualify, Morgan Stanley is limiting bitcoin investments to as much as 2.5 per cent of their total net worth.

Bitcoin has pushed above $61,100 in recent days, surging from as low as $6,301 on 19 March last year (source: Coindesk). A number of reasons are cited, including worries about large central bank money printing to deal with big debt issuance during the pandemic. Bitcoin enthusiasts fear this central bank action will spawn inflation. 

The report on Morgan Stanley’s action said two of the funds on offer are from Galaxy Digital, a crypto firm founded by Mike Novogratz, while the third is a joint effort from asset manager FS Investments and bitcoin company NYDIG.

JP Morgan, BNY Mellon, Guggenheim Partners and others are entering the space. (See a story about JP Morgan here.) Outside of banking and finance, Tesla, the electric car firm led by maverick entrepreneur and space flight tycoon Elon Musk, is among the most high-profile players in bitcoin. The firm said in early February that it had bought $1.5 billion of bitcoin. 

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