Morgan Stanley Investment Management is expanding its push into digital assets with the launch of two crypto exchange-traded products (ETPs) tied to Ethereum and Solana. Following the success of its Bitcoin investment products, the new funds combine low fees with the ability to earn yield through staking, potentially making them an attractive option for investors seeking exposure to the two cryptocurrencies.
One of the key features of the new ETPs is their ability to generate staking rewards for investors. Staking involves locking up crypto assets to help validate transactions on a blockchain, with participants earning newly issued tokens as rewards. The Solana ETP can stake up to 100% of its holdings, while the Ethereum ETP is expected to stake between 50% to 80%.
Each fund will charge a 0.14% expense ratio, among the lowest fees in the category.
“Offering staking benefits makes these products more compelling from a traditional finance standpoint,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Love them or hate them, products like these help lower the barrier to entry for investors looking to gain exposure without having to manage private keys or crypto wallets. The bigger question is whether they create meaningful new demand or simply make it easier for investors to participate in the next crypto bull cycle.”
Success in the Crypto Space
Morgan Stanley’s Bitcoin Trust became the first cryptocurrency ETP offered by a U.S. bank-affiliated asset manager when it launched in April. Since then, it has attracted more than $381 million in assets under management.
In July, Morgan Stanley’s discount brokerage subsidiary E*TRADE launched spot Bitcoin, Ethereum, and Solana trading through a partnership with Zerohash. Like the new ETPs, those offerings also competed aggressively on price, charging a 50-basis-point transaction fee compared with Charles Schwab’s 75-basis-point fee on similar trades.
The Solana Market
While less well known than Bitcoin, Solana has gained traction among financial institutions thanks to its high-speed, low-cost blockchain. Solana investment funds, including those offered by Fidelity, Franklin Templeton, and Invesco, have grown to more than $1 billion in combined net assets.
Despite that institutional interest, Solana has fallen more than 40% year-to-date, while Ethereum is down roughly 35%. Morgan Stanley’s new products may help broaden access to both assets, although whether that translates into stronger demand remains to be seen.
