Plans involve transitioning to in-house digital asset custody as regulations allow.
Morgan Stanley, one of America’s most prominent banks, has filed an updated application with the U.S. Securities and Exchange Commission (SEC) for a spot Bitcoin Exchange-Traded Fund (ETF). The bank’s proposal brings together the specialized capabilities of Coinbase Custody Trust Company and BNY Mellon, assigning both institutions to oversee fund custody. With this move, Morgan Stanley is vying to position itself among the leading U.S. financial institutions in the race for spot Bitcoin ETFs.
Double-Layered Custody Model Combines Crypto and Traditional Finance
Under this structure, the custodianship of Bitcoin assets will be split between Coinbase and BNY Mellon. Coinbase is known for its deep expertise in crypto asset security, maintaining an active role in safeguarding institutional Bitcoin holdings for years. BNY Mellon, on the other hand, brings over two centuries of experience in traditional asset custody and management, supplementing the partnership with services such as fund administration, transfers, and cash management. This dual arrangement allows Morgan Stanley to leverage both the technical acumen of the crypto sector and the reliability associated with conventional finance heavyweights.
ContentsDouble-Layered Custody Model Combines Crypto and Traditional FinanceMorgan Stanley Charts Course Toward In-House Digital Asset OperationsIndividual Investors Gain Easier Access to Crypto ProductsMorgan Stanley Charts Course Toward In-House Digital Asset Operations
Looking beyond initial partnerships, Morgan Stanley plans to ultimately manage digital assets through its own dedicated entity. Early in 2026, the bank submitted an application to the Office of the Comptroller of the Currency seeking authorization to establish a nationwide digital trust institution. Approval would enable Morgan Stanley to deliver custody, trading, and staking services internally via Morgan Stanley Digital Trust, reducing dependence on third-party providers like Coinbase. This transition remains subject to the final decision of regulatory bodies.
Individual Investors Gain Easier Access to Crypto Products
Meanwhile, Morgan Stanley has lifted some existing restrictions on individual client crypto investments. Starting in early 2026, financial advisors at the bank will be able to offer cryptocurrency-based Exchange-Traded Products (ETPs) to customers through all account types, including retirement plans. This policy update aligns Morgan Stanley with other major financial firms in offering broader crypto access following the SEC’s approval of spot Bitcoin ETFs in January.
The collaboration between Coinbase and BNY Mellon enables Morgan Stanley advisors to recommend its Bitcoin fund to various client profiles, while laying the groundwork for in-house custody services in the future. This approach ensures that all income streams — from asset advisory to custody — remain within the bank’s own organizational structure.
For the fund’s custody, Morgan Stanley intends to prioritize “cold storage,” a method that keeps private keys offline, thereby minimizing hacking risks — a standard practice in institutional Bitcoin custody. The fund’s net asset value will be calculated daily at 4:00 p.m., using data from major spot exchanges and the CoinDesk Bitcoin Benchmark.
Morgan Stanley’s strategy mirrors the established playbook for traditional financial giants entering new asset classes: launch with external partners, then gradually integrate operations and revenue streams internally as regulatory and organizational structures mature.
In a parallel development on the same day, former President Donald Trump held a private meeting with Coinbase CEO Brian Armstrong. Following the conversation, reports indicated that Trump has pushed banks to take a more constructive stance on developing legal frameworks for the crypto sector. Morgan Stanley’s latest filing underscores how the financial landscape is being shaped simultaneously by political dynamics and innovative new products.
Not all industry stakeholders are opposed to crypto; the main concerns typically center on potential risks from deposit outflows. In contrast, Bitcoin ETFs are commonly linked to a rise in assets under management, highlighting how divergent business models can produce differing priorities.
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