• Morgan Stanley Buys over 58,000 additional GBTC shares.
• The bank increased exposure as GBTC gears up for an SEC ETF approval.

American multinational bank Morgan Stanley has bought roughly $2 million worth of Grayscale Bitcoin Trust Fund (GBTC) shares, increasing its exposure to Bitcoin to over 6.6 million shares.

A recent filing with the US Securities and Exchange Commission (SEC) revealed that Morgan  Stanley purchased 58,166 as of July 31, 2021, at approximately $34.5 per share. The news follows a recent statement by Dennis Lynch, Head of Counterpoint Global at the bank, referring to Bitcoin as an anti-fragile asset that can resist market disorders.

I think (Bitcoin) demonstrates some “anti-fragile qualities during this period of time-anti-fragile being something that gains from disorder.

Clients demand drive bank’s increased exposure to crypto-assets

Increased demand from clients has driven its increased continued exposure to Bitcoin and other cryptocurrency assets. In April, another filing showed that Morgan Stanley had granted some of its fund permission to seek up 25 percent exposure into Bitcoin-related products.

According to an SEC filing in late June, Morgan Stanley first acquired over 28,289 GBTC shares for around $1.3 million through its European Opportunity Fund.

The biggest reveal so far occurred on August 27, when another SEC filing showed that Morgan had bought over 6.5 million shares of the GBTC through multiple of its funds.  The shares amounted to over $250 million at an average price of $37.8 per GBTC share.

Morgan’s Insight Fund seems to have the biggest Bitcoin exposure at 928,051 shares worth over $31.7 million and representing 0.34 percent of the fund’s total assets. Other funds with significant exposure include Morgan Stanley Institutional Fund Inc, Institutional Trust, and the Variable Insurance Fund.

The investment made Morgan Stanley the second-largest GBTC shareholder after ARK Investment Management which owns over 9 million shares. On an institutional note to investors in March 2021, the banks said that institutional investors seeking exposure to crypto-assets were doing it for speculative reasons, adding that increased interest also indicated an increase in the adoption threshold.

Morgan Stanley also made its first investment in a blockchain-based startup in early June. The bank co-led a $48 million Series B funding round for Coinbase-backed tokenization platform Securitize.

Other major banks with exposure to crypto-assets include JP Morgan, which has invested in crypto products, including Coinbase.

Grayscale Bitcoin Trust prepares for BTC ETF approval

Grayscale is the world’s biggest cryptocurrency assets manager, with over $39 billion assets under management, according to the latest update. The Grayscale Bitcoin Trust fund accounts for $28.237 billion, followed by $9.7 billion from the Grayscale Ethereum Trust.

Unlike many other investment funds, Grayscale is yet to file a formal request with the SEC. However, GBTC has plans to convert the fund into an ETF. In July 2021, Grayscale Bitcoin Trust fund added American banking giant BNY Mellon as a service provider, as the trust eyes to get approval for a Bitcoin ETF in the US.

BNY Mellon will start providing GBTC with fund accounting and administration from October 1 and facilitate its future intentions to become an ETF. Analysts have estimated that the SEC will soon have to issue its first approval for a bitcoin ETF before the end of 2021.