Morgan Stanley weighs tokenized money-market funds and tax-loss harvesting strategies as spot Bitcoin ETF debuts

The debut of Morgan Stanley’s spot Bitcoin ETF on Wednesday marked a major milestone for the investment bank, which manages $9.3 trillion in client assets, while the firm is already weighing what could come next in crypto.

Morgan Stanley filed applications in January for exchange-traded funds tracking Ethereum and Solana, but Amy Oldenburg, head of digital-asset strategy at Morgan Stanley, said the bank is unlikely to stop there.

From Bitcoin to broader crypto exposure

“We’re not going to stop at just Bitcoin,” Oldenburg said, referring to Morgan Stanley’s spot Bitcoin ETF, which has generated approximately $46 million in net inflows since debuting Wednesday, according to Farside Investors. She framed the effort as part of a longer-term expansion rather than a single product launch.

Last year, Morgan Stanley became the first major wirehouse to allow its more than 15,000 wealth advisors to pitch third-party spot Bitcoin ETFs to eligible clients, green-lighting products from Fidelity and BlackRock. Oldenburg said the firm’s next steps could resemble those taken by competitors.

Tokenized money-market funds and digital representations of assets

Oldenburg described a tokenized money-market fund as “definitely a path forward” for Morgan Stanley’s product roadmap, pointing to opportunities across other asset classes through digital representations of real-world assets.

Franklin Templeton pioneered yield-bearing tokens backed by U.S. Treasuries in 2021, but that product has since been supplanted by BlackRock’s BUIDL, which has grown to $2.3 billion, according to RWA.xyz. Fidelity’s Digital Interest Token has garnered total value of roughly $172 million.

Rules-based strategies and tax-related use cases

Parametric, a Morgan Stanley subsidiary, has built rules-based investment strategies for clients, including tax-loss harvesting. Oldenburg said helping clients offset capital gains tax liabilities with digital assets is an area “something to also explore.”

Related crypto initiatives already signaled

Morgan Stanley has also telegraphed additional moves. Last year, it confirmed plans to offer crypto trading via E*TRADE in a partnership with infrastructure provider Zerohash. In February, Oldenburg said Bitcoin-based yield and lending services were also being explored.

Competitive pressure and fee dynamics

Bloomberg Senior ETF analyst Eric Balchunas told Decrypt that Morgan Stanley’s Bitcoin Trust may struggle to grow beyond BlackRock’s $53 billion spot Bitcoin ETF, but it is likely to increase pressure on the category leader.

Balchunas pointed to the ETF’s expense ratio, noting that Morgan Stanley’s 0.14% fee undercuts most competitors. He described the market as a “Terrordome” in which asset managers compete to make products cheaper.

Oldenburg indicated that fee compression is not new for Morgan Stanley and suggested the newly launched ETF could function as a commercial funnel over time.

“We had the opportunity to really focus on how efficiently we can deliver that product from a fee perspective, and not make it solely about making money,” she said. “Now, let’s see some more interesting products continue to develop around that.”