Morgan Stanley’s Crypto ETF Play Reveals Brutal Omission - What They’re NOT Including Speaks Volumes

Wall Street's latest crypto move just dropped—and it's sending mixed signals straight to the tape.

Morgan Stanley filed paperwork for two new crypto ETFs this week, joining the institutional stampede into digital assets. But dig into the filings, and one glaring absence cuts through the bullish noise. They're steering completely clear of direct Bitcoin exposure.

The Institutional Hedging Game

Instead of holding the underlying asset, these proposed funds track futures contracts and companies tangentially linked to the crypto ecosystem. It's a classic Wall Street maneuver: capture the narrative and the potential upside while constructing a moat of derivatives between you and the raw volatility of the asset itself. They want the sizzle, but they're outsourcing the steak.

Reading Between the Regulatory Lines

This omission isn't random. It's a calculated signal to regulators, shareholders, and the market at large. It says the firm sees value in the crypto *theme*—the blockchain infrastructure, the mining companies, the financial rails—but remains unconvinced, or more likely, institutionally unequipped to handle the headline risk of pure-play Bitcoin on its balance sheet. It's finance at its most cynical: betting on the gold rush by selling shovels, but refusing to touch the gold.

The filing is a masterclass in having it both ways—a bullish bet wrapped in a bearish disclaimer. Morgan Stanley is building a bridge to the crypto future, but they're making damn sure there's a toll booth and a guardrail every step of the way.

Inside the prospectus

According to the preliminary prospectuses, both trusts are engineered as passive investment vehicles. Their mandate is to track the market price of the underlying tokens without utilizing leverage or engaging in active trading strategies.

However, their specific exchange for listing remains unnamed, and the ticker symbols are yet to be determined. Still, the operational mechanics guiding each fund have been clearly defined.

For the Morgan Stanley Bitcoin Trust, Morgan Stanley Investment Management Inc. is designated as the sponsor. The fund intends to calculate the daily value of its shares using a benchmark derived from executed trade flows across major spot bitcoin exchanges.

Operationally, the trust expects to handle the purchase and sale of BTC primarily to facilitate the creation and redemption of share baskets.

However, the filing notes that Bitcoin could also be liquidated to cover expenses, potentially utilizing a prime broker arrangement to execute these transactions.

The accompanying filing for the Morgan Stanley solana Trust largely mirrors this structural template but introduces a critical innovation: the inclusion of staking rewards.

The product is designed not only to track the price of the SOL token but also to “reflect rewards from staking a portion of the Trust’s SOL.”

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To achieve this, the sponsor plans to contract with third-party staking service providers. The filing outlines a mechanism for the trust to distribute rewards to shareholders quarterly, in accordance with current Internal Revenue Service guidance.

This feature introduces significant operational complexity compared to plain-vanilla BTC funds.

The prospectus details protocol-specific constraints, including warm-up, activation, and withdrawal periods that can RENDER staked assets temporarily inaccessible. It also explicitly warns that technical failures or malicious actions by staking providers could negatively impact reward generation.

Financially, the structure ties the sponsor's revenue directly to the staking operation's efficiency.

The filing also disclosed that a portion of the staking rewards, expressed as a percentage, the amount of which remains undisclosed in this preliminary stage, will be paid to the sponsor after costs are settled.

Why Morgan Stanley filed for Bitcoin and Solana ETFs

Morgan Stanley’s timing aligns with a convergence of favorable political shifts and regulatory streamlining.

The return of President Donald TRUMP to office has ushered in a more crypto-friendly regulatory environment at the SEC, encouraging traditional financial institutions to participate more broadly in the sector.

Behind the scenes, regulators recently overhauled the “plumbing” required to bring these products to market. In September, the SEC approved significant rule changes permitting national exchanges to implement generic listing standards for commodity-based trust shares, a category that includes digital assets.

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SEC's ruling aims to accelerate the launch of digital asset ETPs by reducing approval wait times.

This procedural update suggests that qualifying ETFs may now bypass the lengthy, case-by-case rule-change process that historically delayed product launches.

Concurrently, federal banking regulators have softened their stance on banks' role as intermediaries. In December, the Office of the Comptroller of the Currency issued Interpretive Letter 1188, confirming that national banks may engage in “riskless principal” transactions involving crypto assets.

This guidance effectively allows banks to buy and sell digital assets as intermediaries in offsetting trades, provided they adhere to safety and soundness standards.

Meanwhile, these external factors mirror Morgan Stanley's internal policy shifts.

The firm has steadily expanded its footprint in the crypto investment space. Last year, it established a 4% allocation cap for “opportunistic” portfolios holding digital assets.

Furthermore, the wealth management division moved to universalize crypto access, opening these investments to all client accounts, including retirement plans.

At the same time, the banking giant has revealed plans to roll out a crypto trading service on the E*Trade platform in the first half of 2026.

Taken together, Nate Geraci, President of the Nova Dius Wealth Store, emphasized that the bank’s decision to manufacture its own products represents a logical next step following its distribution expansion.

He noted:

“Back in October, Morgan Stanley dropped restrictions on financial advisors recommending crypto ETFs…Now launching their own. Makes sense given Morgan’s massive distribution. Clearly they were seeing meaningful demand from clients for crypto ETFs.”

Ethereum and XRP skipped

While the bank is advancing with Bitcoin and Solana, it has notably bypassed ethereum and XRP in this filing cycle, a decision that contrasts with recent flow data for those assets.

For context, spot XRP ETFs in the US have demonstrated remarkable consistency, maintaining a “green streak” with zero days of outflows since their launch on Nov. 13. This has driven cumulative inflows past the $1 billion mark in under 2 months.

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Meanwhile, the exclusion of Ethereum stands out even more given its market capitalization and rising institutional interest.

Ethereum ETFs have generated inflows of more than $340 million within the first two days of the year, according to SoSo Value data.

These flows follow the funds' performance in late 2025, when the category saw approximately 18% of its inflows exit the system.

Since peaking at $15 billion before the liquidations on Oct. 10, these funds bled around $2.8 billion.

Consequently, total assets under management for the Ethereum group retracted to roughly $19 billion, down from a high of over $32 billion in early October.

Regardless, institutional interest, as evidenced by this year's early inflows, remains strong in Ethereum funds.