Key Takeaways

• Morgan Stanley advisors can recommend two spot bitcoin exchange-traded funds (ETFs) to clients now, CNBC reported Friday.

• Sources told CNBC that only select clients with net worth above $1.5 million and aggressive risk tolerances will be suggested these investments.

• Spot bitcoin ETFs became available for trading in the U.S. early this year.

Morgan Stanley's (MS) wealth advisors can now actively pitch two spot bitcoin (BTCUSD) exchange-traded funds (ETFs) to their some of their clients, CNBC reported Friday.

The bank's massive advisor force will be able to solicit investments into BlackRock’s IShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) from eligible clients, CNBC said, citing sources. Clients could qualify is they have a net worth of at least $1.5 million, a high risk tolerance and an interest in investing in speculative assets.

Why Does This Matter?

This is a big step forward for the traditional finance industry's adopting digital assets. When spot bitcoin ETFs began trading in January, some brokerages such as Fidelity or Charles Schwab (SCHW) began offering them outright, while other larger brokerages such as Morgan Stanley took a more cautious approach, restricting the products to select clients on an unsolicited basis. That means those products were only offered if eligible clients asked about them.

In a first from a major Wall Street bank, Morgan Stanley has changed that.

Eric Balchunas, senior ETF analyst for Bloomberg, called the decision a "major deal," citing the near $5.7 trillion in client assets managed by Morgan Stanley's advisors—the largest among U.S. wirehouse brokers that include JPMorgan (JPM), Goldman Sachs (GS), Bank of America (BAC), and Wells Fargo (WFC).

With advisors now actively able to market these spot bitcoin funds, chances of their adoption could go up.

Fidelity and iShares Bitcoin ETFs Draw Most Funds So Far

So, far spot bitcoin ETFs have amassed more than $17.7 billion in net inflows since they began trading, despite massive outflows from Grayscale's Bitcoin Trust (GBTC). The iShares and Fidelity bitcoin ETFs have been the biggest winners to date, with $20 billion and nearly $10 billion of investor money flowing in, respectively, according to data from Farside Investors.

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