Morgan Stanley, UBS on the verge of approving Bitcoin ETF exposure

Morgan Stanley and UBS are actively competing to become the first major banks to offer their clients access to spot Bitcoin exchange-traded funds (ETFs), according to people familiar with the matter.

Sources said that Morgan Stanley wants to be the first major bank to offer its clients full access to spot BTC ETFs and will try to frontrun UBS by making an announcement a few days earlier.

Arch Public co-founder Andrew Parish shared the development on social media, citing sources. He also revealed that UBS is planning to announce the ETF offering in the week of April 8.

The introduction of Bitcoin ETFs has already been partially implemented within UBS’s Private Wealth Management (PWM) division, where they have been technically available to individuals with assets over $10 million on an ‘unsolicited’ basis.

The discussions now revolve around full approval across the institutions’ platforms, which would allow financial advisors to include Bitcoin ETFs in client portfolios actively.

TradFi on the way

This competition highlights the increasing acceptance of cryptocurrencies in the mainstream financial market and signals a significant shift towards incorporating digital assets into traditional investment portfolios.

The demand for spot Bitcoin ETFs contributed to Bitcoin reaching a new all-time high on March 14. The ETFs have achieved remarkable success in the US market, attracting over $12 billion in inflows quickly and generating more than $150 billion in trading volume by early April.

Although ETF activity has moderated recently, the anticipated entry of Morgan Stanley and UBS into this market could rejuvenate interest and activity.

Meanwhile, industry insiders have previously revealed that major financial institutions have been conducting due diligence and are slated to begin offering their clients exposure to Bitcoin ETFs starting in the second quarter.

‘Compliance game of chicken’

Meanwhile, Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, said that sources have told him most banks have not added Bitcoin ETFs to their offerings and are in a “holding pattern.”

He described the situation as a “compliance game of chicken,” with each bank waiting for another to act first. This would provide the necessary regulatory and operational cover for others to follow suit.

Despite the overall caution, UBS has made preliminary steps by allowing access to these ETFs for its Private Wealth Management clients, with certain restrictions. The move indicates a phased approach towards a broader offering that includes advisory services for including these ETFs in client portfolios.

As the finance industry prepares for this potential shift, the timing and impact of Morgan Stanley’s and UBS’s initiatives in the spot BTC ETF market remain highly anticipated. Their entry could redefine investment strategies and further integrate digital assets into the economic mainstream.