March 17, 2021: Morgan Stanley is the first big U.S. bank to offer its wealth management clients access to bitcoin funds, CNBC has learned exclusively.
On Wednesday, the investment bank, a giant in wealth management with $4 trillion in client assets, told its financial advisors in an internal memo that the bank will launch access to three funds that allow ownership of bitcoin, according to people with direct knowledge of the matter.
A move to accept the bitcoin as an asset class was made by Morgan Stanley after clients demanded exposure to the cryptocurrency, said, declined to be identified people, sharing details about the bank’s internal communications.
But, at least for now, the bank only allows its wealthier clients access to the volatile asset; the bank considers it suitable for people with “an aggressive risk tolerance” who own around $2 million in assets.
Investment firms need around $5 million at the bank to qualify for the new stakes. In the other cases, the accounts have to be six months old at least.
And even for those accredited U.S. investors with brokerage accounts and enough assets to get qualified, Morgan Stanley is limiting bitcoin investments to up to 2.5% of their total net worth, said the people.
Two of the funds on offer are from Galaxy Digital, the crypto firm by Mike Novogratz, while the third is a joint effort from asset manager FS Investments and bitcoin company NYDIG.
The Galaxy Bitcoin Fund LP and FS NYDIG Select Fund have minimum investments of $25,000, while the Galaxy Institutional Bitcoin Fund LP has a $5 million minimum.
Clients can likely make investments as early as next month, after the bank’s financial advisors complete training courses tied to the new offerings, said the people.
Goldman Sachs, JPMorgan Chase, and Bank of America’s wealth management divisions do not currently allow their advisors to offer direct bitcoin investments.
This month, JPMorgan filed documents related to a new debt investment tied to a basket of stocks with crypto-exposure like MicroStrategy.