Morgan Stanley Wealth Management is making it significantly easier for its wealthiest clients to convert raw crypto holdings into regulated investment products. The firm has entered a strategic referral partnership with Galaxy Digital, enabling eligible clients to lend bitcoin, ether, and solana in exchange for shares of spot crypto exchange-traded products.
The cornerstone product is the Morgan Stanley Bitcoin Trust (MSBT), the first spot bitcoin ETP from a US bank-affiliated asset manager. This allows clients to convert digital assets into brokerage-compatible shares without triggering a taxable sale.
Here’s how it works: Eligible clients lend their digital assets to Galaxy Digital, which facilitates an in-kind creation through an Authorized Participant. The client receives ETP shares that integrate directly into a traditional brokerage account. These shares unlock capabilities like margin trading and securities lending, which raw crypto cannot access.
Galaxy Digital has reduced the minimum transaction size from $25 million to $5 million and streamlined the onboarding process, making it up to 75% faster for Morgan Stanley referrals. This keeps the service firmly in high-net-worth territory, but within Morgan Stanley’s client base of over $1.5 trillion in assets, even modest adoption could drive significant volume.
The partnership leverages Galaxy Digital, traded on Nasdaq under GLXY, for crypto-native expertise. However, clients should note the inherent counterparty risk in lending digital assets, though Galaxy Digital’s public and regulated status mitigates some concerns compared to platforms that collapsed in 2022.