Morgan Stanley Files for New Bank Charter to Offer Crypto Custody

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On February 28, Wall Street giant Morgan Stanley (NYSE: MS) filed for a de novo national trust bank charter with the US Office of the Comptroller of the Currency (OCC). The bank intends to use this charter to become a legal custodian of cryptocurrencies, while offering crypto trading and staking to its investors.

Should the OCC approve this request, Morgan Stanley will join the likes of Bank of New York Mellon (BNY Mellon) and Fidelity Digital Assets, which began offering crypto custody in 2018 and 2022, respectively. 

Crypto companies with similar charters include Ripple and Crypto.com, highlighting an increasingly favorable regulatory environment for crypto-related businesses. More recently, the OCC issued a request for public comment on the implementation of the GENIUS Act and the evolution of national trust bank charters.

Morgan Stanley plans to adopt cryptocurrencies

The recent filing showcases a complete reversal of Morgan Stanley’s initial position to approach cryptocurrencies with caution. Speaking at the recent Strategy-hosted Bitcoin for Corporations conference, the bank’s Head of Digital Asset Strategy, Amy Oldenburg, said they “absolutely” plan on exploring Bitcoin-based yield and lending services in the long-term.

In the near-term, Morgan Stanley intends to roll out a self-custodial digital wallet that would hold both cryptocurrencies and tokenized real-world assets (RWA). So far, it has updated its guidance to recommend upto 4% allocation to Bitcoin for high-growth profiles. The company has also filed for self-branded Bitcoin, Ethereum, and Solana spot ETFs, while partnering with Zero Cash to launch Bitcoin, Ethereum, and Solana spot trading for E*TRADE retailers.

Institutional crypto flows

In the last week of February, US spot Bitcoin ETFs recorded over $1 billion in net inflows between February 24-26, breaking a five-week persistent outflow streak.

Publicly traded companies such as Strategy, The Block, and American Bitcoin have increased the amount of Bitcoin holdings in their treasuries, a trend now referred to as “orange-pilling.” All this has happened amid ongoing volatility in both traditional and crypto markets. On Friday, Morgan Stanley stock closed at $166.51, having attained an intra-day high of $174.13. This performance is expected to improve in the future, following widespread institutional adoption and possible pro-crypto regulatory policies such as the CLARITY Act.

Source: MarketWatch