Morgan Stanley Goes All In on Crypto

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Wednesday, January 7. And today, we are talking about Morgan Stanley's big crypto adoption bet. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you wanna dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly/breakdownpod. Alright, friends. Another positive set of news today. Morgan Stanley is committing to crypto adoption in a big way, applying for Bitcoin and Solana ETFs on Tuesday. Both products will be plain vanilla ETFs tracking the price of the underlying token without attempting to earn yield through options, strategies, or staking. Now for those who aren't in the financial industry, it's not super obvious why another Bitcoin ETF would move the needle. The space is already crowded with well established leaders in BlackRock, Fidelity, Bitwise, and Grayscale. However, the financial professionals saw this move as a huge moment. Bloomberg ETF analyst Eric Balconis declared this news to be a shocker. His colleague James Safart tweeted, can honestly say I am very surprised by these. Didn't see this coming. I've been saying for literal years that most of these firms will change their tune on crypto, but it was really just a couple of months ago that Morgan Stanley advisors were barred from buying crypto ETFs for their clients. And indeed, Morgan Stanley's advisor network is why this move matters. The bank has over 19,000,000 clients for their wealth management division, representing around 6,500,000,000,000 in assets under management. As Zafart mentioned, Morgan Stanley had prohibited their advisors from suggesting crypto exposure up until October, so this is a huge and frankly rapid turnaround. It's also noteworthy that Morgan Stanley believes they have enough demand to offer their own in house ETF. Large wealth management firms frequently offer their own ETFs for popular asset classes, helping them earn some extra fees and avoid boosting competitors. For example, most wealth management firms have their own s and p five hundred and Nasdaq ETFs, so they aren't sending business to the vanguards of the world. These ETFs don't need to be heavily traded or compete with the premier ETFs in their class. They just need to exist so wealth managers can keep everything in house. It's not wildly expensive to maintain these in house funds, but it is a non zero cost, which makes it very interesting that Morgan Stanley believes they have enough demand to sustain both a Bitcoin ETF and a Solana ETF as well. Matt Hogan, the CIO of Bitwise, pointed out another interesting fact about these funds, noting, Morgan Stanley manages 20 ETFs, but mostly under other brands. These will be the third and fourth ETFs to bear the Morgan Stanley …