A view of Morgan Stanley’s offices in Canary Wharf, London, UK
IStock Editorial | Getty Images
Morgan Stanley is the first major bank in the United States to offer its wealth management clients access to bitcoin funds, CNBC has learned exclusively.
The investment bank, a wealth management giant with $ 4 trillion in client assets, said Wednesday to its financial advisers in an internal memo that the bank is launching access to three funds that allow bitcoin ownership, according to people with direct knowledge of the subject.
The move, a significant step towards the acceptance of bitcoin as an asset class, was made by Morgan Stanley after customers demanded exposure to the cryptocurrency, people said, who declined to be identified by sharing details about the bank’s internal communications. Bitcoin’s recovery last year put Wall Street companies under pressure to consider getting involved in the nascent asset class.
But, at least for now, the bank is only allowing its wealthiest customers to have access to the volatile asset: the bank considers it suitable for people with “an aggressive risk tolerance” who have at least $ 2 million in assets held by company.
Some restrictions
Investment firms need at least $ 5 million in the bank to qualify for new holdings. In both cases, accounts must be at least six months old.
And even for accredited American investors with enough brokerage accounts and assets to qualify, Morgan Stanley is limiting bitcoin investments to up to 2.5% of its total net worth, people said.
Two of the funds offered are from Galaxy Digital, the crypto company founded by Mike Novogratz, while the third is a joint effort by asset manager FS Investments and bitcoin company NYDIG.
Galaxy Bitcoin Fund LP and FS NYDIG Select Fund have minimum investments of $ 25,000, while Galaxy Bitcoin Fund LP has a minimum of $ 5 million.
Customers are likely to be able to make investments as early as next month after the bank’s financial advisers complete training courses linked to the new offerings, people said.
The wealth management divisions of Goldman Sachs, JPMorgan Chase and Bank of America currently do not allow their consultants to offer direct investments in bitcoin.
Earlier this month, JPMorgan presented documents related to a new debt investment linked to a stock basket with exposure to crypto such as MicroStrategy, the software company that keeps bitcoin on its balance sheet, and the payments company Square.