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The banking group Morgan Stanley has announced its intention to launch a spot exchange-traded fund (ETF) linked to the value of Bitcoin. The fund, designated with the ticker MSBT, is set to feature an annual fee of 0.14%. This fee will be shared between Morgan Stanley and its partner cryptocurrency exchanges.
An application has been submitted to the U.S. Securities and Exchange Commission (SEC). If the regulator approves the application, this product will become the first spot Bitcoin ETF launched directly by a major American bank. The 0.14% fee will allow MSBT to undercut the service costs of its main competitor, the Grayscale Bitcoin Mini Trust, which charges a fee of 0.15%. Additionally, Morgan Stanley’s fee is 11 basis points lower than that of the largest Bitcoin fund, BlackRock iShares Bitcoin Trust, and the Fidelity Wise Origin Bitcoin Fund, both of which charge clients 0.25%.
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Spot Bitcoin ETFs directly hold Bitcoin and track its market price, making the fee a significant consideration for investors: lower fees are more advantageous for investors. According to estimates from The Block, the original Grayscale Bitcoin Trust, which has a fee of 1.5%, lost over $15 billion after the emergence of competitors with lower fees before it adjusted its fee structure.
Morgan Stanley plans to allocate $1 million for the preparation of the exchange-traded fund for trading. The asset custodians for the fund will be Coinbase, which will act as the broker, and BNY Mellon, which will be responsible for cash management and administration.
The MSBT fund intends to utilize a standard mechanism for the creation and redemption of shares, typical of large exchange-traded funds. It is anticipated that each trading unit will include at least 10,000 shares to maintain liquidity. Recently, the New York Stock Exchange (NYSE) published a listing notice for MSBT, which typically occurs just before trading begins.
