Major Wall Street firms entering crypto ETFs, the real winner is not the capital inflow

Morgan Stanley’s latest move has disrupted the market’s conventional understanding of crypto ETFs. This investment banking giant is not only applying to launch a Bitcoin ETF but is also simultaneously laying out trusts for Solana and Ethereum. Interestingly, industry insiders believe that the scale of funds may not be the key factor in this strategic move. The true value might lie in brand influence, talent attraction, and long-term discourse power.

Not Just Products, But Strategic Signals

According to the latest news, Morgan Stanley submitted an application to the U.S. Securities and Exchange Commission on January 6th to launch exchange-traded funds tracking the prices of Bitcoin and Solana. Then, on January 7th, they also filed for a spot Ethereum ETF. These actions are seen within the industry as significant markers of traditional financial institutions further embracing crypto assets.

Why now?

It is worth noting that spot Bitcoin ETFs were approved two years ago, and giants like BlackRock and Fidelity already have products in the market. Morgan Stanley’s decision to enter at this time is not simply to chase existing products but involves deeper considerations.

Bitwise advisor Jeff Park pointed out that Morgan Stanley’s strategy is not limited to short-term ETF performance. Even if these ETFs do not ultimately reach expected fund sizes, the bank could still achieve significant returns across multiple dimensions. This reflects a fact often overlooked: for large investment banks, the true significance of entering the crypto space far exceeds mere AUM (Assets Under Management) growth.

What exactly are the hidden dividends?

Analysis suggests that the “intangible benefits” Morgan Stanley is betting on mainly include several aspects:

• Brand Recognition: Launching crypto ETFs makes institutions appear more forward-looking, younger, and more willing to take risks. This image itself has strategic value, helping to enhance appeal among the new generation of investors.

• Talent Competition: In the fiercely competitive investment banking sector, crypto initiatives help attract younger talent with crypto backgrounds, which is crucial for long-term competitiveness.

• Increased Discourse Power: Through crypto trading and tokenization collaborations, Morgan Stanley is exploring new profit models for its online brokerage platform E*TRADE, thereby gaining greater influence in the crypto financial field.

• Defensive Strategy: This is also a defensive move to counter platform disintermediation and fee outflows. In a scenario where BlackRock’s Bitcoin spot ETF (IBIT) has already gathered high liquidity, Morgan Stanley’s launch of its own product essentially acknowledges a simple truth: the party that controls distribution channels truly owns the customer.

Larger Market Signals

Morningstar ETF analyst Bryan Armour shares a similar view. He suggests that Morgan Stanley’s sudden push into crypto ETFs may aim to steer existing Bitcoin investment clients toward its own products, enabling a rapid catch-up despite being later to the game.

More importantly, the entry of major banks into the Bitcoin ETF market will further legitimize the sector and prompt more financial institutions to follow suit. What does this mean?

Currently, Bitcoin is priced at $90,151.90, down 2.79% in the past 24 hours, but this does not diminish the market’s recognition of the long-term value of crypto assets. Morgan Stanley’s move indicates that market demand may be far beyond what crypto professionals previously expected. Even though BlackRock’s IBIT has become the fastest ETF to reach $80 billion in AUM in history, Morgan Stanley still believes there is a large unmet demand in the market.

This sends a strong signal: the crypto asset market is still in its very early stages, and the scale of demand may be seriously underestimated.

New Changes in Wall Street’s Competitive Landscape

As one of the top global investment banks alongside Goldman Sachs and JPMorgan, Morgan Stanley’s actions are opening a new round of competition for the integration of traditional finance and crypto assets. It is foreseeable that other major financial institutions will closely monitor this development and may follow suit in launching their own crypto products.

Essentially, the core of this competition is no longer about whose product is better, but who can better control customer distribution channels. Under this logic, brand, channels, talent, and discourse power often matter more than mere product competitiveness.

Summary

Morgan Stanley’s entry into the crypto ETF market appears to be a product application on the surface, but it fundamentally reflects a reassessment by traditional financial institutions of the strategic importance of crypto assets. The bank’s bet is not only on the rise or fall of Bitcoin and Solana but also on long-term layouts involving brand, talent, and distribution channels. This move signals that Wall Street’s embrace of crypto assets is shifting from an exploratory phase to a strategic deployment phase, and the true market demand may be far beyond our expectations. For the crypto market, this means further legitimacy and ongoing institutional capital inflows—long-term positive signals.