Key Takeaways
Morgan Stanley’s initial wave of Bitcoin exchange-traded fund demand came primarily from self-directed investors, confirming a wider market trend of slow adoption from financial advisors, according to Amy Oldenburg, the bank’s head of digital asset strategy. The observation comes as new data reveals only 4% of registered investment advisors (RIAs) have allocated to the new products.
"The crypto industry was built at the expense of the brokerage industry that wasn’t able to participate," Aaron Kaplan, founder and co-CEO of crypto platform Prometheum, said in a recent interview. Kaplan’s firm is one of several building new infrastructure to help advisors compete with crypto-native platforms and bridge the gap to traditional brokerage workflows.
The gap between retail and professional adoption is stark. While spot Bitcoin ETFs have attracted cumulative inflows of $57.29 billion since their January launch, analysis of 13-F filings by Discovery Data shows that just 4% of RIAs hold any crypto ETFs. Of the roughly $40 billion in RIA-held assets, more than half ($22.7 billion) sits in BlackRock’s iShares Bitcoin Trust (IBIT), making it the clear favorite for the small segment of participating advisors.
This dynamic highlights the hurdles that remain for broader institutional acceptance, even with a successful product launch. The disparity suggests that while self-directed investors are comfortable with direct crypto exposure, the larger pool of capital managed by advisors is waiting for more developed infrastructure, clearer regulatory frameworks, and tailored products before committing.
The market is responding to the gap with a new suite of sophisticated products aimed directly at the wealth management channel. Beyond simple ETF exposure, firms are offering solutions for tax optimization, risk management, and direct ownership that are critical for financial advisors. Eaglebrook Advisors, for example, provides crypto separately managed accounts (SMAs) that allow for tax-loss harvesting and can be integrated into estate plans, a feature unavailable in an ETF wrapper.
Meanwhile, Bitwise Asset Management has made its crypto model portfolios available on Nitrogen's advisory platform, and Calamos has launched structured-protection ETFs that offer buffered downside exposure to Bitcoin. These products aim to address the specific compliance and portfolio construction needs of advisors, which differ significantly from the priorities of self-directed traders. Morgan Stanley’s own offering, the Morgan Stanley Bitcoin Trust (MSBT), features one of the lowest expense ratios on the market at 0.14 percent, but has so far attracted a modest $270.13 million in assets, per data from 24/7 Wall St.
This article is for informational purposes only and does not constitute investment advice.
