Morgan Stanley increased its holdings in BlackRock Bitcoin ETF by 23%

Morgan Stanley increased its holdings of BlackRock's bitcoin ETF by 23% in the second quarter and added positions in Ethereum, Solana and several crypto-related companies.

Morgan Stanley increased its holdings in the second quarter. BlackRock's spot Bitcoin ETF shares increased by 23% to approximately 16.5 million shares, while adding new exposure to Ethereum, Solana and several crypto-related companies.

Highlights Overview

Morgan Stanley increased its holdings of approximately 3.04 million shares of BlackRock IBIT in the second quarter. As of June 30, the value of its IBIT position was US$549 million. Positions in the BlackRock Ethereum ETF increased by 202% to 4.6 million shares. The new positions include Morgan Stanley's own Bitcoin fund and two Solana investment products.

A U.S. Securities and Exchange Commission document signed on August 11 showed that Morgan Stanley holds approximately 16.5 million shares of BlackRock iShares Bitcoin Trust, up from approximately 13.4 million shares at the end of the first quarter. Increased its holdings of approximately 3.04 million IBIT shares, a quarter-on-quarter increase of approximately 23%. However, as Bitcoin prices fell in the three months ended June 30, the reported value of that position fell nearly 18% from approximately $667 million to $549 million.

Morgan Stanley submitted the report in the form of a combined Form 13F, covering the positions of multiple associated managers. The second quarter regulatory filing document contained 45905 items, with a total reported value of approximately US$1.89 trillion. Form 13F provides a quarter-end view of selected U.S. listed securities held by institutional investment managers. It does not identify every transaction during the quarter, nor does it disclose short positions, nor does it prove that each reported stake represents Morgan Stanley's own proprietary investment.

Morgan Stanley adds its own Bitcoin fund

In addition to its larger IBIT position, Morgan Stanley reported holding 2.57 million shares of the Morgan Stanley Bitcoin Trust, valued at approximately US$43.3 million as of June 30. This position is new because MSBT began trading in the second quarter. Morgan Stanley launched the Bitcoin fund on April 8 on the New York Stock Exchange in Arca with an annual management fee of 0.14%. The product holds Bitcoin and is designed to track its spot price after deducting fees and other liabilities.

MSBT fees are less than 0.25% charged by BlackRock IBIT and Fidelity Wise Origin Bitcoin Fund. Gray scale Bitcoin mini trusts charge 0.15%, while Morgan Stanley's product was one basis point lower than that rate when launched. Despite launching its own funds, Morgan Stanley continues to hold larger positions in products managed by competitors. As of the end of June, the market value of its US$549 million IBIT holdings was more than 12 times the value of its reported MSBT holdings.

Several other Bitcoin funds also increased their positions. Morgan Stanley increased its stake in the Grayscale Bitcoin Mini Trust ETF and Bitwise Bitcoin ETF, while its position in the Fidelity Wise Origin Bitcoin Fund increased by nearly 38%.

According to a report on August 8, MSBT subsequently increased its holdings of approximately 232.5 BTC, worth US$15.05 million, when Bitcoin was trading around US$65000. Blockchain intelligence platform Arkham estimated that the purchase increased the fund's balance to 6563 BTC, valued at more than $426 million at the time. Bitcoin balances at the fund level differ from the MSBT shares reported by Morgan Stanley on Form 13F. The ETF's digital assets support all outstanding shares, while the 13F records shares reported by Morgan Stanley and its associated managers covered by its filings.

Ethereum and Solana Fund Positions Increase

Ethereum exposure increased through two funds during the quarter. Morgan Stanley increased its position in the BlackRock iShares Ethereum Trust ETF by approximately 202% to approximately 4.6 million shares. The bank also reported holding approximately 5.1 million grayscale Ethereum pledged mini ETFs, an increase of approximately 26% from the previous quarter. Both products provide Ethereum exposure through securities traded in the United States, but their structures, fees and treatment of pledge rewards differ.

Solana appears in the document through two new positions. Morgan Stanley reported holding approximately $4.25 million in gray Solana Pledged ETF shares and approximately $2.26 million in Fidelity Solana Fund. These positions occurred before Morgan Stanley launched its own Solana and Ethereum products after the quarter ended. On July 28, the bank launched Ethereum and Solana exchange-traded products with the codes MSSE and MSOL respectively. Both products are charged an annual management fee of 0.14% and include pledge clauses. Regulatory filings show that Ethereum products may use 50% to 80% of their Ethereum as collateral, while Solana products may use all of their SOL holdings as collateral.

For U.S. investors, a 13F position represents exposure to securities available through a traditional brokerage account, rather than directly owning Bitcoin, Ethereum or Solana. The SEC filing reported the value of fund shares on June 30, so subsequent token price changes and portfolio transactions were not captured.

Growth in Circle and Bitcoin Infrastructure Positions

One of Morgan Stanley's largest holdings in the crypto space was in Circle Internet Group, the company behind the USDC stablecoin. Its reported Circle position increased from approximately 1.46 million shares in the first quarter to approximately 8.32 million shares at the end of the second quarter. This change is equivalent to an increase of approximately 6.86 million shares, bringing the reported position to more than 5.5 times the previous one. Because Circle is traded on the American Stock Exchange, its shares fall within the securities covered by Form 13F and are not reported as direct stablecoin positions.

The positions of several Bitcoin mining and digital infrastructure companies have also increased. Documents show that Morgan Stanley has increased its holdings in Cipher Digital, Core Scientific, Hut8 and Bitdeer Technologies. These equity investments carry company-specific risks in addition to the Bitcoin market price. Based on public disclosures by companies, its value may also depend on power costs, debt, mining output, hardware efficiency, and revenue from data centers or high-performance computing businesses.

At the same time, Morgan Stanley has expanded access to digital assets for its U.S. clients. In July, the bank completed the promotion of E*TRADE, allowing eligible customers to buy, sell and hold Bitcoin, Ethereum and Solana at a transaction fee of 0.50%.

Coinbase and some mining positions decrease

Not all crypto-related securities increased their positions during the quarter. Morgan Stanley reported approximately 550,000 fewer shares in Coinbase than at the end of March. The bank also reduced its CleanSpark position by more than 3.1 million shares. CleanSpark is still among the U.S. publicly traded bitcoin miners covered by institutional documents, but Morgan Stanley's second quarterly report showed that its holdings have shrunk significantly. Bitfarms was completely removed from the portfolio. Morgan Stanley reported a position of about 8 million shares in the previous quarter, but did not disclose any corresponding positions on June 30.

Since Form 13F only presents positions on the last day of the quarter, the document does not provide Morgan Stanley's bid or sell prices for IBIT, Circle, Coinbase, CleanSpark or Bitfarms, nor does it show whether these positions have changed after June 30.