Morgan Stanley to offer Bitcoin access via 3 funds

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CNBC has learned that banking giant Morgan Stanley will offer its customers access to Bitcoin. According to an internal memo from the banking institution, crypto companies Galaxy Digital and FS NYDIG will activate the product.

NYDIG is proud to partner with Morgan Stanley, the first US bank to bring their wealth management clients access to #Bitcoin. https://t.co/Xq9ZjQ2yjn

– NYDIG (@NYDIG_BTC) March 17, 2021

With over $ 4 trillion in assets under management, Morgan Stanley is the first major U.S. bank to launch a product that exposes its customers to cryptocurrency. Sources cited by CNBC claimed the decision was made after Morgan Stanley received pressure from its clients.

Access to Bitcoin, but not for everyone

However, only individuals with more than $ 5 million can qualify for the funds. Morgan Stanley claims that BTC is only suitable for those with “aggressive risk tolerance”. Even these customers are allowed to put 2.5% of their money into the cryptocurrency.

Therefore, the minimum investment for the funds is $ 25,000 for the Galaxy Bitcoin Fund LP and the FS NYDIG Select Fund. The Galaxy Institutional Bitcoin Fund LP requires customers to invest at least $ 5 million. Mike Novogratz, CEO of Galaxy Digital said:

Galaxy is proud to partner with Morgan Stanley, the first US bank to provide Wealth Management clients with access to Bitcoin funds.

In parallel, a Morgan Stanley report claims that Bitcoin is reaching the point of becoming an “investable asset class.” The report carefully recommends that a direct recommendation be made to customers interested in exploring the cryptocurrency. However, it is claimed that BTC may be at a critical point for adoption.

With the cryptocurrency, we believe that the threshold will be reached. A fixed regulatory framework, a deepening of liquidity, the availability of products and a growing interest of investors – especially among institutional investors – have come together.

The report also suggests an “investment strategy” with a small position (2.5%) in BTC held in the form of publicly traded products. In the US, investors have limited options to follow the proposal of the report.

But just like Morgan Stanley’s client, regulators in this country have received a lot of pressure from institutions seeking exposure to BTC. The report states:

Our first modeling, repeated in the spirit of a recently published study by the CFA Institute, suggests that diversification benefits from the low correlation of the cryptocurrency with other assets and that improvements in the Sharpe ratio with positions no greater than 2.5 % can be achieved. It is important to remember that we are only at the top in the first inning.

Bitcoin’s price, however, has shown little reaction to the news. At the time of writing, BTC is trading for $ 55,591 with a side move on the last day and a small gain of 1.4% in the last hour.

Bitcoin with minimal profits versus Morgan Stanley’s fund. Source: BTCUSD Tradingview

Last year, BTC saw a 1,007% increase due to the institutional takeover. Morgan Stanley’s funds are sure to further bolster BTC’s place as a world-class store of value.