Morgan Stanley is about to become the first major US bank to offer its wealth-management client access to cryptocurrency funds.
In a major coup for former hedge fund manager Mike Novogratz, a veteran crypto bull who held on during the long bear market that started after the late-2017 peak, MS is reportedly offering some clients access to two funds managed by Novo’s Galaxy Digital, along with a third fund that’s a joint offering from FS Investments and bitcoin company NYDIG.
According to CNBC, which broke the story (the financial news channel often brings on Novogratz to comment on the cryptocurrency market), MS sent its financial advisors an email Wednesday alerting them to the new offerings. The crypto funds will only be offered to clients who describe their risk tolerance as “aggressive” and who have at least $2MM in assets held by the firm. MS’s wealth division manages $4 trillion for mostly high-net-worth individuals and families.
MS’s decision to offer crypto and bitcoin investments to its wealth management clients follows arch-rival Goldman Sachs’ decision to revive its crypto trade desk. But for once, Morgan has managed to outmaneuver its rivals, since it will be the only major bank offering its wealth-management clients access to crypto and bitcoin. Wealth management divisions at Goldman, JPM and BofA don’t offer bitcoin exposure.
Of course, both banks have been left to watch in awe as bitcoin prices have soared 15-fold from the post-2017 lows around $4k. Now, with clients reportedly demanding access to some crypto-exposed products, MS is finally acquiescing, probably after some clients started moving money to Coinbase.
In addition to its restrictions on client assets, individual firms need to have at least $5MM in client money with MS to qualify for access to the new funds. Also, accounts must be more than six months old, so clients can rest assured that the new offerings won’t provoke a rush of clients eager to pay MS for selling them exposure to these exclusive crypto funds. Morgan Stanley is also capping crypto investments at 2.5% of clients’ total net worth.
Clients will be able to start buying the funds in a month, after the bank’s brokers have finished a training course about crypto.