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The bank has set the price of its proposed spot bitcoin fund at 14 basis points, establishing it as the most competitively priced fund on the market, pending approval.
Morgan Stanley headquarters in New York City (Michael M. Santiago/Getty Images)
What to know:
- Morgan Stanley intends to launch a spot bitcoin ETF priced at 14 basis points, undercutting existing low-cost competitors and potentially initiating a new fee competition.
- As spot bitcoin ETFs provide nearly equivalent exposure, Morgan Stanley’s reduced fee may encourage advisors to transfer client assets from higher-cost alternatives.
- If authorized, the MSBT fund would represent the first spot bitcoin ETF launched directly by a prominent U.S. bank, utilizing Morgan Stanley’s extensive wealth management network to compete on pricing and distribution.
Morgan Stanley aims to set the price of its proposed spot bitcoin exchange-traded fund (ETF) at 14 basis points, slightly below the current low-cost alternatives for similar products, as indicated by an amended filing with the U.S. Securities and Exchange Commission (SEC). This action could trigger a new wave of fee competition among existing offerings.
The most recent S-1 filing, submitted on Friday, reveals the bank’s strategy to undercut competitors charging between 15 and 25 basis points. Currently, the lowest fee available in the market is Grayscale’s Bitcoin Mini Trust ETF , which has a 0.15% expense ratio. Larger funds, such as BlackRock’s iShares Bitcoin Trust (IBIT), have set their pricing at 25 basis points.
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While the difference may seem small, it could be sufficient to influence asset movement.
Spot bitcoin ETFs provide nearly identical exposure. Each fund holds bitcoin and aims to track its value. This leaves cost as one of the few factors investors and advisors can leverage. A financial advisor can transition a client from one ETF to another with a single transaction, maintaining the same exposure while reducing yearly fees.
This dynamic has influenced the ETF market historically, with lower-cost products typically attracting new investments, whereas higher-fee funds may experience asset outflows over time. Grayscale’s flagship offering, its Bitcoin Trust (GBTC), currently holds about $10 billion in assets, down from $29 billion since its launch in January 2024.
Morgan Stanley’s size introduces an additional consideration. Its wealth management division manages trillions in client assets and boasts one of the largest advisor networks in the sector. Even minor allocation adjustments within this base could shift billions of dollars between funds.
The pricing strategy also reflects a tactical approach. By entering the market with a lower fee, Morgan Stanley may be seeking to quickly capture market share in a sector where products are challenging to differentiate. Cost and accessibility, rather than structure, often determine which funds expand.
The filing follows the New York Stock Exchange’s confirmation that it has issued a listing notice for MSBT, indicating that the product could commence trading rapidly if it receives approval.
If regulatory authorities grant approval, the fund would become the first spot bitcoin ETF launched directly by a major U.S. bank, establishing a new competitive landscape where fees and distribution will be crucial factors.
