Morgan Stanley launches stablecoin offering through money market fund

Morgan Stanley’s investment management arm has launched “Stablecoin Reserves Portfolio,” an offering that allows stablecoin issuers to park the reserves backing their stablecoins in one of the bank's money market funds while earning interest.

The offering is part of the Morgan Stanley Institutional Liquidity Funds trust (MSNXX), which aims to preserve capital, provide daily liquidity and distribute income while maintaining a $1 net asset value, Morgan Stanley said on Thursday.

“Developing innovative ways to work with stablecoin issuers is another step towards modernizing the financial infrastructure,” said Amy Oldenburg, head of Morgan Stanley’s digital asset strategy.

The bank said the offering seeks to comply with the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), a framework that was signed into law in July, which led several TradFi payment service providers like Western Union and Zelle to expand into the stablecoin space.

Morgan Stanley is one of several Wall Street firms that have pushed aggressively into the crypto market recently to meet rising institutional client demand.

On April 8, Morgan Stanley rolled out the Morgan Stanley Bitcoin Trust (MSBT), which has tallied $172 million in net inflows since launching. 

It has also filed paperwork with the US securities regulator to list an Ether (ETH) and staked Solana (SOL) exchange-traded fund.

In February, Morgan Stanley also filed for a national trust banking charter with the Office of the Comptroller of the Currency. Approval would enable it to offer crypto custody and execute purchases, swaps and transfers on behalf of clients.

Morgan Stanley’s offering is open to other investors

Morgan Stanley noted that the money market fund invests in cash, US Treasury securities with maturities of 93 days or less and overnight repurchase agreements backed by Treasury securities. 

Data from Morgan Stanley’s website shows investors will need to invest a minimum of $10 million into MSNXX, which has a 0.15% management fee.

Related: FDIC moves to regulate stablecoin issuers under the GENIUS Act

It said shares in the fund are expected to be held primarily by stablecoin issuers, but noted they may also be available to other investors.

Morgan Stanley is one of the biggest investment banks in the world, with its roughly $16,000 financial advisers managing more than $6 trillion worth of client assets.

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