It’s been almost two years to the day since Grayscale launched the first bitcoin exchange-traded fund (ETF) in the US, sparking a digital gold rush among investment banks as BlackRock and others followed.
There are now more than 20 listed crypto spot ETFs in the US, 12 tracking bitcoin, and the rest ethereum. Other crypto ETFs are still pending approval, which many expect to happen sometime in early 2026.
The impact of institutional investors funnelling into crypto markets through these ETFs alongside more traditional investors can’t be understated. The combined assets under management (AUM) for bitcoin ETFs — a measure of how much each investment bank holds in its fund — sits at about $115bn, with ethereum ETFs totalling roughly $12bn. Analysts broadly agree that this new pipeline of money has changed the fundamental market dynamics of cryptocurrencies such as bitcoin, helping drive prices to record highs while also dampening volatility in the long run.
The latest development is that Morgan Stanley, one of the traditional investment banks, has filed applications for bitcoin, ethereum and solana ETFs. On the surface, this is big news in that another Wall Street stalwart has thrown its weight and confidence behind crypto. But the bigger story lies in the timing and what it signifies for the future of cryptocurrency as a firmly legitimate asset.
Two years is a long time to wait before entering a market, whether you’re in banking or coffee. It allows peers such as the BlackRocks to establish control and entrench their place in the market. But Jeff Park, chief investment officer at ProCap BTC and author of widely read thought pieces on Substack, says Morgan Stanley’s late entrance to the ETF game points out a few overlooked things about the current market.
There’s something striking about watching the behemoths of Wall Street realise, one by one, that a crypto investment product is no longer optional but essential and if they don’t offer it, their clients will go elsewhere
One is that the bitcoin ETF market is far bigger and earlier than even crypto insiders expected. Despite BlackRock’s ibit bitcoin ETF building a historic $80bn AUM lead, Morgan Stanley is betting there is still untapped demand through its own wealth channels, while the mere presence of a branded bitcoin ETF helps project relevance and attract individual ultra-high-net-worth clients.
“It means we are still so early,” Park writes in a post on X. But the launch is also defensive. Allowing advisers to go to third-party ETFs at other banks means surrendering fees, data and customer relationships. Bitcoin, in other words, has become cool in traditional finance. There’s something striking about watching the behemoths of Wall Street realise, one by one, that a crypto investment product is no longer optional but essential and if they don’t offer it, their clients will go elsewhere.
Bitcoin purists would argue that the system is being co-opted by the very institutions it was designed to bypass. Yet the strength of a truly decentralised cryptocurrency such as bitcoin lies in its organic evolution, in which there is no central authority directing its path.
Originally conceived as a peer-to-peer value-transfer system, bitcoin’s fundamentals have since transformed it into an asset that both early adopters and traditional investors, clients of Morgan Stanley and others, seek to hold. Bitcoin moves freely with the market, and, ultimately, ownership is open to anyone.
De Wit is country manager for Luno South Africa
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