Morgan Stanley, one of the world’s largest investment banks with $6.5 trillion in assets under management, announced that it holds the largest cryptocurrency, Bitcoin, on behalf of its fund clients. Here are the details…
Morgan Stanley invests in cryptocurrency fund
Morgan Stanley European Opportunity Fund has announced its Grayscale Bitcoin Trust (GBTC) investment that holds true spot Bitcoin. He stated that he bought GBTC worth $3.6 million. “Consistent with its core investment strategies, the fund may invest up to 25% of its total assets in a wholly owned subsidiary,” the fund’s statement says.
The affiliate can invest in Bitcoin either indirectly through cash-settled futures or through the Grayscale Bitcoin Trust (GBTC), a privately offered investment vehicle that invests in Bitcoin.
This fund holds mostly British, Italian, French, Swiss and Dutch stocks and aims to “maximize capital gains by investing primarily in high-quality established and emerging companies located in Europe that the investment team believes are undervalued at the time of acquisition”.
Bitcoin has become a “portfolio diversifier”
That’s why the US-based GBTC has been added as a “portfolio diversifier”. At this time, the general European Opportunity Fund was noted to have $1 billion in assets, but this particular fund has around $120 million. As such, Morgan Stanley has allocated 3 percent of assets to Bitcoin, but these GBTC shares are currently worth $1 million, down to 1 percent at this point. Various studies suggest that at least 1 percent of a portfolio should be allocated to Bitcoin for higher risk-adjusted returns. This seems to be exactly what Morgan Stanley is doing.
Meanwhile, cryptocoin.com As we reported, Blackrock recently added Bitcoin to its Global Allocation Fund. These funds tend to be aimed at passive investors seeking exposure to a variety of assets. It is one of the largest markets in the world, if not the largest in terms of spot assets, as most investors tend to hold funds and one or two specific stocks.
Large investment firms have been able to invest in BTC since 2018
So far, Bitcoin has not played at all in this market and some are still resisting, but the newest asset in the world is starting to make its way into managed funds. Previously, the infrastructure for such funds to add Bitcoin did not exist, but as of 2018, market makers, hedge funds and investment managers began to enter the Bitcoin market. What really changed the game was the addition of a large number of Bitcoin spot ETFs in Europe and Canada.
Access to the Bitcoin market is very easy in both Europe and Canada. But it’s not that easy in the US yet, so Morgan Stanley has invested in BTC via GBTC. As such, funds can now easily add wrapped Bitcoin as an ETF security, meaning passive and casual investors will increasingly be exposed to BTC. Recognizing this integration, the Bank for International Settlement (BIS) gave commercial banks the green light to keep 1-2 percent of their capital in crypto. The Fed has also made it clear that commercial banks can provide crypto-related services. For this reason, Bitcoin is being embraced by investment managers.
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