Morgan Stanley to Remove Restrictions on Wealth Funds Holding Crypto

The financial services giant Morgan Stanley has made a new decision to further embrace cryptocurrencies in its business. The firm has decided to broaden access to crypto investment for all of its clients, regardless of their account type.

According to a CNBC report, people familiar with the matter revealed that Morgan Stanley will implement the new rule from October 15. The firm told its financial advisors that it will lift crypto investment restrictions placed on clients, including those with retirement accounts.

Morgan Stanley Lifts Crypto Restrictions

Morgan Stanley previously required accounts to have aggressive risk tolerance and at least $1.5 million in assets before they could invest in crypto through taxable brokerage accounts. Cointab reported in August 2024 that only wealthy Morgan Stanley clients were allowed to invest in BlackRock and Fidelity’s spot Bitcoin exchange-traded funds (ETFs). 

Despite the restrictions, the bank still took extra steps to ensure the investors do not overly expose their portfolios to the Bitcoin investment products. However, the growing adoption of crypto in the U.S. has led the firm to lift the restrictions and allow crypto access to everyone. Hence, the firm’s financial advisors can start pitching crypto funds to any client from next week.

It is worth mentioning that the financial services firm still intends to prevent client overexposure to cryptocurrencies. It will use an automated monitoring process to ensure that their portfolios are not overly concentrated in crypto assets, as these are still considered speculative. The bank recommends a maximum initial allocation of 4% for its clients, depending on their goals, which range from wealth conservation to opportunistic growth.

Enabling Spot Crypto Trading

Although Morgan Stanley currently limits its crypto offerings to just BlackRock and Fidelity spot Bitcoin ETFs, the bank plans to add more funds to the list. The ETFs to be added will not be restricted to just Bitcoin, but will encompass other digital currencies. When this happens, all clients will have access to any of the listed products.

On a more exciting note, Morgan Stanley is planning to enable spot crypto trading for its retail clients from next year. The services offered by its E-Trade subsidiary result from the firm’s efforts to explore ways to enter the crypto market. The assets to be traded include bitcoin (BTC), ether (ETH), and Solana (SOL). The bank is already interacting with U.S. regulators to make the new development possible.

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