Morgan Stanley sets 0.14% Bitcoin ETF fee, lowest in market if approved

Investment bank Morgan Stanley is seeking to launch its spot Bitcoin exchange-traded fund at a 0.14% fee, which would make it the cheapest in the US market and potentially force rivals to cut fees to stay competitive.

The 0.14% fee, proposed in Morgan Stanleys latest S-1 registration statement on Friday, would be one basis point below the Grayscale Bitcoin Mini Trust ETF ($BTC), currently the cheapest in the US market, and 11 basis points below the BlackRock-issued iShares Bitcoin Trust ETF (IBIT).

“Big move here. They are not messing around,” Bloomberg ETF analyst James Seyffart said, predicting that the Morgan Stanley Bitcoin Trust (MSBT) is “likely to launch in early April.”

Source: James Seyffart

Fellow Bloomberg ETF analyst Eric Balchunas said the low fee means that none of Morgan Stanleys roughly 16,000 financial advisors — which manage $6.2 trillion in client assets — would feel conflicted in recommending the product to its clients.

Given that spot Bitcoin ETFs track the price movements of Bitcoin ($BTC), Morgan Stanleys ultra-low fee could spark a fresh fee war in the $83 billion market, putting immediate pressure on rivals to cut costs or risk losing assets.

Regulatory approval would make Morgan Stanley the first bank to issue a spot Bitcoin ETF, expanding access to Bitcoin exposure for millions of its high-net-worth clients.

“They are the ultimate gatekeepers of rich boomer money,” Balchunas added.

Morgan Stanley previously selected Coinbase and Bank of New York Mellon as the proposed custodians for its Bitcoin ETF.

Morgan Stanley seeking suite of crypto ETFs, banking charter

Morgan Stanley, previously one of the more crypto-hesitant Wall Street firms, filed for the spot Bitcoin ETF in the first week of January, along with a Solana (SOL) ETF.

Related: Bitcoin traders see 53% odds of sub-$66K $BTC by April 24

It then filed papers for a staked Ether (ETH) ETF later that week, and by the end of the month, the bank appointed one of Morgan Stanleys longest-standing executives, Amy Oldenburg, to lead its digital asset team.

Source: James Seyffart

Morgan Stanley also applied for a national trust banking charter on Feb. 18, seeking to custody certain digital assets and execute purchases, sales and swaps for clients in addition to staking services.

In October, before the investment bank adopted its institutional crypto strategy, it recommended a 2% to 4% allocation to crypto portfolios for investors. It also allowed its financial advisors to recommend crypto funds to clients with individual retirement accounts (IRAs) and 401(k)s.