Morgan Stanley’s ETF shows banks are all-in on Bitcoin

Morgan Stanley’s Bitcoin exchange-traded fund (ETF) has managed to rake in almost $400 million since it was launched in April, which reflects the growing acceptance of cryptocurrencies among financial institutions. As regulations become clearer in the US and the Asian regions, traditional financial institutions are now ready to move on with their businesses in the digital asset economy.

For a wide range of institutional and wealth management clients, a Bitcoin product offered by banks represents what the cryptocurrency industry has always been missing—credibility based on regulations. The change symbolizes not just an increase in demand for investments, but also shows that clearer rules are diminishing the boundaries between conventional finance and cryptocurrencies.

Morgan Stanley’s fund becomes the first by a bank to near $400M

According to reports, the Bitcoin ETF from Morgan Stanley, which is being traded on the NYSE Arca, already has more than $391 million in assets under management. This ETF was introduced in April with over $33 million in assets as its opening amount, plus it holds the record of being the first Bitcoin ETF by a large bank. For this week alone, it raised $15.7 million, according to Farside Investors, and Bloomberg Intelligence’s senior ETF analyst described it as one of the greatest ETF launches of the year.

The inflows are notable since they took place at a tough time for the overall market. The US spot Bitcoin ETF has gathered a total of $274 million in inflows in the last week, but in the last few days Morgan Stanley’s firm has been the only asset manager to escape making net withdrawals.

Over the years, Morgan Stanley has constantly been developing its crypto presence. The first time it gave wealthy customers an option to invest in Bitcoin was in 2021, when it introduced Galaxy Digital funds. Its chairman, Ted Pick, stated that the bank holds talks with state authorities about how to expand its crypto services safely. In addition to this, in April, Amy Oldenburg, the head of digital assets at Morgan Stanley, argued that education is one of the biggest challenges facing the industry today, not product creation.

Washington still hasn’t finished the rulebook it promised

However, regulatory uncertainty still influences the US market.

The CLARITY Act has been passed by the House of Representatives but is still stuck in the Senate, where at least 60 votes are needed, including the support of some of the Democrats. Traders on Polymarket reduced the probability of the law getting passed in 2026 to 37% on July 22 after being in conflict over whether the enforcement of the proposed ethics provisions would be in the hands of the Justice Department or state attorneys general. Senator Angela Alsobrooks called the proposal from the White House “unserious.”

According to an analyst, if implemented, the legislation will empower the Commodity Futures Trading Commission to supervise the crypto spot markets, define “mature blockchain,” and determine whether digital tokens are regulated by the SEC or the CFTC. President Donald Trump has insisted that the Senate pass the legislation before its scheduled recess from August 11 onwards, but that may become more challenging than it seems.

Why banks watch the stablecoin yield fight so closely

A major concern is regarding the clause on stablecoins. Banks worry that interest payments on stablecoins will drive customers away from traditional lenders. Patrick Witt, a White House adviser for digital assets, has called it a possibility of “deposit flight,” urging a more controlled method of dealing with the issue of “idle yield” so the whole law, in general, is not compromised. This draft makes it illegal to pay interest on spare stablecoins but permits gaining rewards based on specific transactions.

After withdrawing support for an earlier Senate draft in January, Coinbase CEO Brian Armstrong endorsed the revised CLARITY Act in April, saying it was “time to pass” the legislation after months of bipartisan negotiations.

Financial implications of this legislation are huge, as evidenced by the figures recorded by Coinbase, as it had revenue from stablecoins of $305 million in Q1 of 2026 with average USDCs amounting to $19 billion. Furthermore, banks, asset managers and market infrastructure companies expand into crypto by means of custody, tokenization, ETFs, payments, and settlement and not by sticking to one line of business.

Singapore hands Coinbase the cleaner rulebook

As US politicians are still discussing cryptocurrency legislation, Singapore has already provided the regulatory clarity that many companies are seeking.

Coinbase plans to increase its headcount in Singapore from about 150 to 200 by the end of 2026. The move comes about three years after the company received its complete Major Payment Institution license from Singapore’s Monetary Authority in October 2023. Its various products in Singapore include the stablecoin in Singapore dollars, XSGD, whose reserves are maintained by DBS Bank and Standard Chartered.

The company is reducing headcount elsewhere, making its hiring push in Singapore a clear signal that it sees long-term institutional growth in well-regulated markets.

Bitcoin was trading near $64,096 as the news emerged, according to Bitcoin Magazine, showing little movement over the week. CoinShares head of research James Butterfill remained cautious, saying the firm sees “no significant upside potential from here.”

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