Morgan Stanley Opens New Crypto-to-ETF Path With Galaxy Digital

Morgan Stanley Wealth Management has agreed a referral arrangement with Galaxy Digital. Eligible clients can lend cryptocurrency in exchange for shares in spot crypto exchange-traded products, including the Morgan Stanley Bitcoin Trust (MSBT).

The structure lets investors move existing crypto holdings into regulated brokerage products without selling them. It also lowers the entry threshold and shortens onboarding, widening access for qualified wealth clients who already hold digital assets.

How the In-Kind Referral Works

A client lends specified assets such as Bitcoin (BTC), Ether (ETH), or Solana (SOL) to Galaxy. Once Galaxy confirms it can settle the loan in ETP shares, it coordinates an in-kind creation with an authorized participant.

The shares then land in the client’s chosen account. Because the crypto is lent rather than sold, the process avoids a taxable disposal and the execution risk of converting to cash.

MSBT, which launched in April as the cheapest US Bitcoin ETF, anchors the product set. The bank had already cleared its wealth advisors to recommend Bitcoin funds to clients.

Lower Minimums Meet a Falling Market

Galaxy will drop its lending minimum for Morgan Stanley referrals from $25 million to $5 million. Onboarding, which can currently exceed four weeks, may shrink by up to 75% in some cases.

The timing is notable. Bitcoin trades near $60,749 after slipping about 4% in a day, while Ether sits around $1,588 and Solana near $65, both down sharply over the past month.

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Bridging Traditional Finance and DeFi

The deal builds on Galaxy’s New York license and its earlier work launching European crypto ETPs with DWS.

“This referral arrangement represents a significant step forward in bridging traditional finance and decentralized finance, providing more investors with streamlined opportunities to diversify,” read an excerpt in the announcement, citing Alison Nest, Head of Investment Solutions Products at Morgan Stanley Wealth Management.

Meanwhile, Galaxy framed the appeal around convenience for clients balancing both worlds.

“Streamlined onboarding and lowered transaction minimums make it easier for clients to integrate digital assets alongside traditional investments, supporting a holistic approach to wealth management,” the press release added, citing Zane Glauber, Global Head of Distribution at Galaxy.

The arrangement keeps client assets and fees inside Morgan Stanley’s ecosystem while handing Galaxy the lending and creation work.

Whether lower minimums translate into steady ETP inflows during a softer market is the question the coming weeks may answer.