Will MS' Move Into Crypto ETFs Provide Competitive Advantage?

As crypto exchange-traded funds (ETFs) become an increasingly important focus for banks, given the rise in investor demand for regulated digital-asset exposure, Morgan Stanley MS has filed with the U.S. Securities and Exchange Commission to launch ETFs linked to Bitcoin and Solana. The move marks the first time one of the 10 largest U.S. banks has sought to offer crypto ETFs.

The proposed products — the Morgan Stanley Bitcoin Trust and the Morgan Stanley Solana Trust — are designed to give investors direct price exposure to the two cryptocurrencies without requiring them to own or store the tokens themselves. Structured as passive vehicles, the funds would track the spot prices of Bitcoin and Solana, net of fees and expenses, and would not use leverage or derivatives.

This move signals a strategic shift for Morgan Stanley, which has until now largely acted as a distributor or custodian for crypto-related products. By developing its own ETFs, the bank can integrate digital asset exposure directly into its expansive wealth management platform, allowing it to retain fee income internally rather than relying on third-party asset managers.

Also, since crypto ETFs are high-margin, asset-based products that generate recurring management fees, even modest asset inflows can translate into meaningful fee income for Morgan Stanley, given the scale of its investment management division.

The move also aligns with Morgan Stanley’s decision to increase focus on expanding its wealth and asset management operations. For a long time now, MS has been lowering its reliance on the capital markets for income generation, and increasing its focus on wealth and asset management operations. Strategic acquisitions, including Eaton Vance, E*Trade Financial and Shareworks, have been important steps in this direction, which have bolstered the company’s diversification efforts, enhanced stability and created a more balanced revenue stream across market cycles. Now, if Morgan Stanley launches crypto-ETFs, it will benefit as digital assets become a more established component of institutional and retail portfolios.

MS Peers Competing for Crypto-Related Exposure

Competition has been intensifying for Morgan Stanley as banks like Goldman Sachs GS and JPMorgan JPM are expanding crypto-related capabilities even if they have not yet launched proprietary ETFs.

Goldman Sachs has been expanding its crypto exposure primarily through institutional-facing trading and structured products rather than retail offerings. The bank operates a digital asset trading desk that provides clients with access to bitcoin and ether through cash-settled derivatives, options and non-deliverable forwards. Goldman Sachs has also been active in crypto-linked structured notes, allowing investors to gain tailored exposure while managing downside risk.

JPMorgan has taken a broader, infrastructure-led approach to crypto and blockchain. The bank offers crypto trading services to institutional clients and has built out custody capabilities, while also piloting on-chain settlement and tokenized deposits through its blockchain unit, Onyx. JPMorgan has launched blockchain-based platforms for wholesale payments and repo transactions, enabling faster and more efficient settlement using tokenized assets.

Now, as Morgan Stanley enters the crypto ETF arena, its success will hinge on leveraging its wealth management distribution strength, brand credibility and integrated product offering to compete effectively in an increasingly crowded and fast-evolving market.

Morgan Stanley’s Price Performance, Valuation & Estimates

The company’s shares have gained 33% in the past six months, outperforming the industry’s 22.6% growth.

From a valuation standpoint, MS trades at a 12-month forward price-to-earnings (P/E) of 17.99X, above the industry average of 15.71X.

The Zacks Consensus Estimate for Morgan Stanley’s 2025 earnings suggests a 24.3% rise on a year-over-year basis, while 2026 earnings are expected to grow 5.5%. In the past 30 days, earnings estimates for 2025 and 2026 have moved upward.

Currently, MS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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