Giant players enter the scene: Morgan Stanley officially applies for Bitcoin and Solana spot ETFs

Global financial giant Morgan Stanley has submitted documents to the U.S. SEC to apply for spot Bitcoin and Solana ETFs. This not only marks the bank, which manages trillions of dollars in assets, officially entering the cryptocurrency fund space but also potentially injects new vitality into traditional financial markets. If approved, these products will provide qualified investors with a regulated on-ramp to digital assets, further integrating cryptocurrencies into mainstream investment portfolios. The application comes at a time when the U.S. spot cryptocurrency ETF market has surpassed $150 billion in assets under management, indicating sustained strong institutional demand.

A New Chapter for Wall Street’s Traditional Giants in Crypto

Two years after the explosive growth of crypto ETFs in 2024, one of Wall Street’s most influential players has finally decided to step into the ring. On January 6, 2025, Morgan Stanley Investment Management filed a Form S-1 registration statement with the U.S. Securities and Exchange Commission (SEC), officially applying to launch the “Morgan Stanley Bitcoin Trust” and “Morgan Stanley Solana Trust.” This move is far more than simple product expansion; it symbolizes a strategic shift in traditional finance from cautious observation to full embrace of digital assets. Unlike models that merely distribute third-party products from firms like BlackRock or Fidelity, Morgan Stanley has chosen to build internal fund vehicles, aiming to retain more of the economic benefits of crypto investments within its own ecosystem.

This application is not an isolated event but the culmination of Morgan Stanley’s recent series of crypto-related initiatives. As early as September 2024, reports indicated that the firm had partnered with crypto infrastructure providers and planned to allow clients of its E*Trade platform to trade mainstream cryptocurrencies starting in 2026, while also developing crypto asset allocation strategies. The ETF application submission aligns perfectly with these plans, forming a strategic synergy. Todd Sohn, senior ETF strategist at Strategas Securities, commented: “Cryptocurrencies have become impossible for issuers to ignore, especially for institutions with internal advisory teams. This is another milestone of acceptance, similar to Vanguard allowing crypto ETF trading and U.S. banks permitting small allocations.”

What does Morgan Stanley’s entry mean for ordinary investors? The most direct answer is a dual boost in credibility and convenience. Through this well-established, highly regulated financial giant with over 150 years of history, investors will be able to access Bitcoin and Solana risk exposure via familiar brokerage accounts, just as they would for traditional stocks or funds. This effectively bypasses technical hurdles like private key management and wallet security that deter many traditional investors. Morgan Stanley explicitly cited “more lenient U.S. regulatory stance” as a factor behind expanding its digital asset offerings, perhaps signaling that the overall regulatory environment is evolving positively.

Decoding Morgan Stanley’s Dual ETF Strategy

Morgan Stanley is not only applying for a single Bitcoin ETF but is also betting on both Bitcoin and Solana—this “dual-track” approach has a deep strategic logic. First, Bitcoin, as digital gold and the largest crypto by market cap, is an unavoidable “cornerstone” asset for any institution entering the space. Applying for a spot Bitcoin ETF is a natural move to strengthen its full product lineup and meet client demand. The filing states that the Bitcoin trust will adopt a passive management strategy, aiming to track the price of Bitcoin in USD (net of fees and expenses) directly, without leverage, derivatives, or active trading—keeping the structure simple.

More forward-looking and topical is its Solana trust application. As the sixth-largest cryptocurrency by market cap, Solana is known for its high throughput and low transaction fees, and is viewed as one of the most competitive alternatives to Ethereum. A key innovation in Morgan Stanley’s Solana product is the plan to include staking—locking tokens in the network to support operations (like validating transactions) and earn network rewards. This means the ETF will not only provide exposure to Solana’s price but also offer potential additional income (staking yield), a cutting-edge feature among crypto products launched by mainstream U.S. financial institutions.

This strategic choice reflects Morgan Stanley’s precise judgment of crypto market segmentation. While Bitcoin ETFs (like BlackRock’s IBIT) have attracted hundreds of billions of dollars, many niche products based on smaller tokens struggle to raise meaningful scale. Solana, with its robust ecosystem, active developer community, and growing number of decentralized applications (DApps), has successfully entered the “mainstream altcoin” category. According to Bloomberg data, existing Solana trust products in the U.S. have surpassed $1 billion in total net assets, with nearly $800 million in cumulative inflows, demonstrating initial institutional recognition. Morgan Stanley’s entry aims to capture this early growth phase.

On a deeper level, this banking giant is shifting from merely a “distribution channel” to a “product creator and ecosystem builder.” Morgan Stanley operates the world’s largest wealth management business, overseeing approximately $8.2 trillion in client assets. It no longer wants to just distribute crypto products from other firms and earn commissions but seeks to issue its own ETFs to capture all management fees and lock clients into its ecosystem. This transformation mirrors the paths of asset giants like BlackRock and Fidelity, marking a move where cryptocurrencies evolve from speculative fringe assets into an integral part of major financial institutions’ core product matrices.

Key Data Snapshot: Morgan Stanley’s Market Outlook at Entry

• Spot Bitcoin ETF AUM: Over $123 billion
• Total U.S. spot crypto ETF market size: Over $150 billion (about 130 funds)
• Bitcoin ETF AUM as a percentage of total Bitcoin market cap: Approximately 6.6%
• Net inflows since early 2025: Over $1.1 billion
• Current Bitcoin price (as of Jan 5): Close to $93,800
• Existing Solana trust total net assets: Surpassed $1 billion
• Morgan Stanley Wealth Management assets: About $8.2 trillion

In-Depth Analysis of Product Structure and Market Impact

The S-1 filing submitted by Morgan Stanley details the operation mechanism of its Bitcoin trust, providing a template for understanding how mainstream financial products are embracing crypto. The trust’s net asset value will be calculated daily, based on aggregated market activity data from multiple major Bitcoin spot exchanges. Shares are expected to be listed on a national securities exchange, with the specific trading code to be determined. Morgan Stanley Investment Management will act as sponsor, while custody and operational oversight will be handled by designated service providers. Outsourcing these functions to compliant service providers is a standard model combining traditional finance with crypto infrastructure.

Of particular note is the creation and redemption mechanism. Only authorized participants (typically large market makers or institutions) will be able to create or redeem large blocks of fund shares in cash or physical Bitcoin. For cash redemptions, third-party Bitcoin counterparties will execute buy/sell transactions on behalf of the trust, with trading costs borne by authorized participants. This mechanism is key to ensuring ETF market prices closely track the net asset value of the underlying assets. Retail investors cannot redeem shares directly; they can only buy or sell on the secondary market via brokerage accounts, with prices potentially deviating slightly from NAV due to supply and demand. This structure effectively addresses the long-standing issue of significant premiums or discounts that plagued early Bitcoin trusts like GBTC.

Morgan Stanley’s entry will undoubtedly intensify competition in the spot crypto ETF market. According to Bloomberg industry research, Morgan Stanley currently does not rank among the top ETF issuers and manages less in this space than newcomers like Neos Investments, which only started in 2022. Its existing funds mainly focus on fixed income and equities. Therefore, this application is both offensive—aiming to capture the lucrative crypto asset management fee market—and defensive—protecting its wealth management clients from losing assets to competitors with first-mover advantages. BlackRock’s spot Bitcoin ETF has become one of its largest revenue drivers, with nearly $100 billion in assets, demonstrating the fee potential of such products. Morgan Stanley clearly does not want to miss out on this feast.

From a broader financial market perspective, Morgan Stanley’s move exemplifies how traditional Wall Street firms are deepening their digital asset footprints. Goldman Sachs, JPMorgan, Citigroup, among others, have strengthened institutional crypto services, launched trading desks, and piloted custody, settlement, and tokenization projects. These actions form a clear trend: cryptocurrencies are being systematically integrated into the global financial infrastructure. For the entire crypto industry, a brand like Morgan Stanley not only brings capital but also invaluable credibility and broader investor education, helping to push the industry toward maturity and regulation.

Future Outlook: The Next Stage of Mainstream Crypto Adoption

Morgan Stanley’s application aligns with broader regulatory and commercial shifts. The firm is also preparing to offer direct crypto trading services for Bitcoin, Ethereum, and Solana through its E-Trade platform, pending approval from regulators like the Federal Reserve. This means future clients may be able to conduct comprehensive crypto research, asset allocation, and trading within a single platform, enjoying a seamless experience bridging traditional and digital assets. This “one-stop shop” concept is a common blueprint for many large financial institutions building future competitive advantages.

As more traditional giants like Morgan Stanley enter, the investor profile in crypto markets will continue to evolve. Institutional share will increase, potentially changing market volatility characteristics and raising standards for regulation, transparency, and custody security. Meanwhile, competition will extend beyond fee rates on individual products to service capabilities across the entire wealth management ecosystem, research quality, and asset allocation solutions. For blockchains like Solana, inclusion in mainstream financial products means its network security, decentralization, and long-term development roadmap will face more rigorous scrutiny, which in turn will push project teams to uphold higher standards.

For retail investors, the foreseeable future involves increasingly abundant and convenient channels for crypto investment, but also greater complexity in choices. Balancing fees, liquidity, tax implications, and personal risk appetite across spot ETFs, futures ETFs, trusts, and potentially direct trading services will become new challenges. The entry of institutions like Morgan Stanley does not eliminate crypto market risks but signifies that this emerging asset class is being incorporated into time-tested modern financial risk management and analysis frameworks.

Ultimately, Morgan Stanley’s Bitcoin and Solana ETF applications can be seen as a milestone: heralding the end of the “wild growth” phase of crypto, and the rapid arrival of a new stage where digital assets are deeply integrated into the mainstream financial system, evolving within a regulated framework. This process will inevitably involve pains and adjustments, but the trend is clear. As one seasoned market observer put it, the entry of a new asset class into ETFs is a rare event, and further institutional adoption is the strongest proof of its vitality and potential.

What is Solana? Why is Morgan Stanley Favoring It?

Solana is a high-performance single Layer 1 blockchain known for its innovative Proof of History (PoH) consensus combined with Proof of Stake (PoS). This mechanism aims to achieve extremely high transaction throughput (theoretical peak of 65,000 transactions per second) and very low transaction fees, with the goal of supporting large-scale decentralized applications (DApps) and mainstream crypto platforms. Its native token is SOL, used primarily for paying transaction fees, staking to secure the network, and governance within the ecosystem.

In recent years, Solana has experienced significant growth and challenges. It has fostered a vibrant ecosystem of DeFi, NFTs, and metaverse applications, especially during the 2021 bull market, attracting many developers and users with its speed and low costs. However, the network has also faced multiple congestion and outage incidents due to demand surges, raising questions about its decentralization and robustness. The project team continues to optimize technology to improve stability and scalability. Currently, Solana ranks among the top six cryptocurrencies by market cap, supported by a strong community and ongoing development efforts, making it one of Ethereum’s most competitive rivals.

Key Differences Between Spot and Futures ETFs

Morgan Stanley’s application is for a spot ETF, which is fundamentally different from the Bitcoin futures ETFs already available in the market. Understanding these differences is crucial for investors.

1. Underlying Assets: Spot ETFs hold actual Bitcoin (or Solana), requiring the trust to purchase and custody real cryptocurrencies. Futures ETFs, on the other hand, hold Bitcoin futures contracts traded on regulated exchanges like CME.
2. Tracking Error and Costs: Spot ETFs can more accurately track the real-time price of the underlying crypto. Futures ETFs are subject to “contango”—when futures prices are higher than spot prices—leading to rolling costs that can cause long-term underperformance relative to the spot price.
3. Product Structure and Risks: Spot ETFs have a straightforward structure, with risks mainly from custody and price volatility. Futures ETFs involve derivatives, with additional risks from contract rollovers, market basis, and management of futures positions.

Because they offer a purer, more cost-effective exposure, spot Bitcoin ETFs have rapidly attracted far more capital than futures ETFs since their approval in early 2024. Morgan Stanley’s decision to apply for a spot product aims to provide clients with this superior investment option.