US investment bank Morgan Stanley may be positioning itself so that even if its newly announced spot Bitcoin exchange-traded fund underperforms, it will still deliver strategic benefits across the firm, according to ProCap chief investment officer Jeff Park.
“Morgan Stanley is making the bet that even if their ETF doesn't scale to blockbuster success, there's an intangible benefit that will help build their clout,” Park said on Wednesday.
His comments come just a day after Morgan Stanley filed with the US Securities and Exchange Commission to launch two ETFs, one tied to Bitcoin (BTC) and the other to Solana (SOL).
Crypto market “much bigger” than believed
Park said that no matter how significant the inflows are for Morgan Stanley’s new products, the move will bring social, reputational, and financial benefits.
He pointed to Morgan Stanley’s “focused attention” on monetizing its brokerage subsidiary ETRADE through crypto trading and tokenization partnerships.
“This becomes especially more relevant as a positive externality if it helps recruit top talent vs competitors,” Park said.
Park said the announcement shows that the crypto market is “much bigger” than crypto industry professionals anticipated. “Especially to reach new customers,” he said.
He also argued that another factor beyond performance is the reputational edge the spot Bitcoin ETF gives the firm by making it look pro-Bitcoin.
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“This is because every asset manager knows that having a Bitcoin ETF communicates that they are forward thinking, young, and a little edgy,” Park said.
“Others could follow,” says an ETF analyst
Morningstar ETF analyst Bryan Armour told Reuters on Tuesday that Morgan Stanley’s sudden move into crypto may mean it wants to “move clients that invest in Bitcoin into their ETFs, which could give them a fast start despite their late entrance.”
"A bank entering the crypto ETF market adds legitimacy to it, and others could follow,” Armour said.
Morgan Stanley is considered one of the world’s top three investment banks, alongside Goldman Sachs and JPMorgan. While the other two firms have crypto investment ties, neither offers its own crypto ETF.
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