Morgan Stanley, one of the largest investment banks in the United States, is exploring expanding its bitcoin exchange-traded fund (ETF) offerings by allowing its roughly 15,000 brokers to recommend the products to clients.

The move could potentially bring a new round of interest and capital to the Bitcoin ETF spot market, which has grown significantly since the Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETFs in January 2024.

Morgan Stanley currently allows its clients to purchase Bitcoin ETFs, but only on a voluntary basis. This means that clients should contact their advisors about investing in these products, rather than the advisors actively recommending them. The firm's potential policy change will allow brokers to offer Bitcoin ETFs directly to their clients, potentially increasing demand for these investment vehicles.

However, before allowing such purchases, Morgan Stanley is working to create "guardrails" to manage the associated risks.

These include risk tolerance requirements and restrictions on the distribution and frequency of trading. The Firm is committed to providing a controlled expansion of Bitcoin ETF sales, providing access to all interested clients while prioritizing discretion.

Two executives familiar with the company's plans confirmed that Morgan Stanley is laying the groundwork for the changes, although they did not give a specific timeline for when the new policy might be implemented.

“We'll make sure we handle it very carefully... we'll make sure everyone has access to it. We just want to do it in a controlled way."

If Morgan Stanley allows its brokers to recommend Bitcoin ETFs, it will be the first among its peers to do so. Other major brokerages, such as Bank of America's Merrill Lynch and Wells Fargo, have taken a similarly cautious approach after approving spot Bitcoin ETFs. These firms offer products, but only on a voluntary basis and, in some cases, with additional restrictions. For example, Merrill Lynch requires clients to have at least $10 million in assets to purchase a Bitcoin ETF.

Morgan Stanley's potential move is evidence of growing demand for spot Bitcoin ETFs, which allow investors to gain exposure to the oldest cryptocurrency without directly owning the asset.

Since their approval, these ETFs have attracted significant inflows, with U.S.-traded spot Bitcoin ETFs from major financial institutions amassing cumulative net inflows of $12.29 billion and more than $53.6 billion in assets under management as of Wednesday, according to SoSoValue. , according to SoSoValue.