The Future of Capital Allocation Is Bitcoin | Bitcoin 2026

Good afternoon everyone. Amy, thank you for being here. We're talking about a lot of news that's come out of Morgan Stanley over the the last 90 days really since you took this new role. But first I really want to start with your background. You spent most of your career in emerging markets where the focus is really pricing regulatory risk, information asymmetry, and infrastructural gaps. How has that informed your time taking over digital asset strategy at Morgan Stanley? What's been helpful or harmful with that lens? Tyler, good to see you and nice to be here today. I think one of the interesting things since taking this role just 4 months ago is some folks will come up to me and say, "Let me tell you everything you need to know about digital assets." As if I have never spent any time in the space and to your point being associated with emerging markets you know, that they were some of the first users of of Bitcoin across the world. I think even as we see crypto adoption now 17 of the top 20 countries in terms of crypto adoption is coming from that developing world for many reasons. So this has been a very um long time interest of mine to see different financial models underpin the financial system across the world. And in those first 4 months even more recently your team launched MSBT. The first first Bitcoin backed ETP from a US chartered bank. Do I have that right? That's right. So first first G-SIB bank to launch our bank owned asset manager to launch Bitcoin ETP. And um we have to start with Bitcoin. I mean we have a a path forward but I mean Bitcoin is 1.5 trillion. It's different. I think one of the things to also maybe highlight I do think there still needs to be much more research on why Bitcoin is different than many of the other cryptocurrencies. I think as we've seen many of these ETFs come to market they're just all clubbed together as crypto ETFs but I think there is distinction in terms of what the underlying asset is and I think we have to bring some of that fundamental research back as to what you're taking exposure to. Let's give it up for give it up for that. I I want to I want to dig a little deeper there in terms of the the work that Morgan Stanley did and and you know how is that work being done externally, internally to to drive those decisions and how do you see that specifically spilling over to the asset management side of your business? So it's been many years that we've been involved in the broader digital asset space watching these different models evolve over time. And I think the regulatory environment made it more difficult for the traditional banks to get involved. I think that's one of the things we've seen and one of the reasons we've been able to make more progress even in the last year is because the regulatory environment has been more supportive for us doing that. So it's been something we've been working on for years. It's not like we didn't care. I know there's been some discussion that there's been very negative comments around Bitcoin or it's what it was used for. But I think that's an education issue. I still think there's a lot of education that needs to be done around the real use cases going forward and well in the past and going forward to understand why people are using Bitcoin or other digital assets to transact but that's something that we can continue to to build into now. So we start with Bitcoin. We have road map a road map across the board. One other point to make is we are rolling out spot crypto trading. So I know there's a lot of people in this room and beyond this room that don't believe in the structure of ETPs and I understand that for some clients there's a lot of usefulness around that structure. At Morgan Stanley we design products for different client needs. And so if an ETP is something that fits your portfolio that's what we're we're able to offer you. If it's spot crypto that's something that we'll be able to do in the future. I think one of the things we were talking about before we came on stage today is is there a future where some of the banks or wealth management platforms will be able to offer services to self-custody wallets or non-custodial wallets. So you know, that's I think that's a future that will continue to be explored and and and there's new models that have yet to be discovered that we'll continue to stay on top of. Well, in terms of offering access to spot Bitcoin trading in the future and even to have a bank like Morgan Stanley really interfacing with the underlying digital asset what has that infrastructural process looked like in terms of all all the decisions, the risk frameworks, how how are your team approaching that and getting comfortable with that with interfacing directly on Bitcoin rather than just through the securities market? The the the the infrastructure build out is not easy. I mean it's not like we can go and you you would think we can go and pick from you know, 20 different providers. But it's not it's not that easy to do that especially when in many cases if it's to service of an ETP we're buying underlying Bitcoin but we also have to operate the traditional infrastructure of that ETP or the ETF infrastructure. And everyone's a specialist, right? You're either like a crypto custodian and you specialize in in custodying crypto or you're an ETF tech stack and that's one of the things that we've been most challenged with is that multi-disciplinary understanding that we have to continue to deliver on again and again as we roll out some of these products. And in the last couple months Morgan Stanley's also filed for an OCC charter. How does that fit into this infrastructure build out you're describing and and what would that enable the bank to be able to do in the future for its clients? So we have three main divisions within Morgan Stanley. We have our institutional securities business. We have our wealth division and we have our asset management division. To be clear the Bitcoin ETP was launched out of our asset management business. But one of our big initiatives on the wealth platform is spot crypto trading. And as we continue to build that out that OCC digital trust will allow us to offer services around some of that spot spot crypto trading going forward. And and in terms of being able to offer these services you know and particularly for the ETP products the custodian choice being kind of what underpins the the security and the and the risk of the Bitcoin held inside those products. You mentioned that it was a lengthy decision to narrow down that list of custodians and that you're taking a multi-custodian viewpoint on the landscape. Can you talk a little bit about that risk framework and that decision process for a bank like Morgan Stanley? We actually found it interesting as we went down the path to explore the the custody different custody models that ETP providers used across the board and we found that there was really no standardization whatsoever. We felt strongly about trying to deliver a product that was also backed by another G-SIB. So this is not only is it the first G-SIB issued ETP but we're also using a G-SIB as an underlying custodian. So so it's in the filings. We've been we've been public about it but Coinbase and Bank of [clears throat] New York are our custodians for that product. So we we've talked a lot about the infrastructure and and how we got here. MSBT launched with a bang pulling in over 100 million in its first 6 days of trading. I would love to hear what the feedback has been from advisors, from the institutional investors that you're interfacing with. What what's been the reaction to the product and and what are the questions that allocators still have about Bitcoin? I think this is something to clarify because I think there's a view and I've seen a number of headlines about it that we launched this product specifically just to push our our our financial advisors to distribute. You know, our wealth management platform is an open architecture platform. Those products are due diligence the same way every any other ETP in the market is is due diligence. So we compete as a manufacturer in the same way any other asset manager on the street. But interestingly enough that those first days of trading all of that is self-directed. All of that was was it was not even uh available in advisory on the wealth platform. So I think that's like very interesting to see although it does fall in line with a trend we see across all the the ETP exposure on the wealth platform which is 80% of that is self-directed. So the advisors are still very limited in their exposure to allocating to Bitcoin at this point. Even though the one thing to mention is we have made recommendations on allocation, too. I know we were talking about allocation to Bitcoin. We've announced allocations, allocation recommendations to Bitcoin of 2 to 4% and it's still been slow. So, I think that still points to significant education that needs to be done really understanding the fundamentals kind of going back to my earlier point on on why you want to take exposure to this asset. And and outside of just Bitcoin and and the Bitcoin ETPs, you know, Morgan Stanley through through its asset management business is some of the largest holders of strategy securities, strategy common stock and increasingly in the preferred perpetual securities. What what does this market look like and what what has the the bank I guess learned about the digital credit digital treasury company model? Uh strategy our good friends of Morgan Stanley. It's we've been on a journey with them even actually prior to them investing in Bitcoin. So, we've seen the entire evolution of the company first buying Bitcoin on the balance sheet and for so many reasons that drove some of our allocation to that in our funds early on, but then even now with stretch, it's still been less than 12 months in the market. So, again something that's designed for wealth clients. I think even Fong said lots of that most of the exposures coming in through retail. But I think as over time we'll continue to see this topic of credit will continue to develop over time. Do you think it's just time or are there specific things that let's say credit investors or institutional allocators are really looking to see in these products to to open that up and and to flip that ownership dynamic to be majority institutional? So, we were talking earlier that a credit rating would be helpful, right? Some way unfortunately for better or worse the traditional finance world likes to put thing in put things in a box and it needs to look like something they're familiar with to to gain comfort with it. And if it doesn't and they don't know what box to put it in, there is a hesitation there that will always be challenged. It's something that's manageable. You can educate around it, but you're pushing a boulder up a hill. So, the question is can we make can can we find a framework going forward to allow the investors to feel more comfortable or make it look a little bit more like what they're used to as they think about credit products. So, so credit rating and and product history, what what else do you think the market's really looking for or or has strategy already cracked the code on it? I hate to go back to like educate on Bitcoin, but you really have to. I mean, it's you can you can you can present it as a you know, 11% yield or double digit yield, which is is really interesting. But the underlying asset is still Bitcoin and I think there's still a lot of work to be done there. I mean, there's so much low hanging fruit with just like spot allocation or like uh you know, not even a credit allocation or derivative allocation. And yeah, just so much more work to do and and the credit products are just an extension and and they get a little bit more complex than even the underlying asset. On that on that educational topic, which you've hit on a number of times how is the bank approaching that and and what is your team at Morgan Stanley doing to push Bitcoin education? So, everything that we can possibly do on our wealth platform, we launched an entire financial advisor education effort. We continue to roll out different resources on the internal side because even our employees need to be educated to support the business going forward. There's new there's new governance dynamics, technology dynamics that all need to be supported. So, we need to do that. And then with clients, we spend hour after hour after hour on the on the phone talking to them about this space overall and and how to think about it in their portfolio. And and there's still probably more we can do. I think one thing I would like to see from the market is deeper research just on the underlying and some of the dynamics. I know over time and I know if you're deep in the the Bitcoin community, we all have our personalities that we follow that write that research, but we need to bring that into the mainstream a little bit more and make sure that the advisors are getting access to that and the end clients getting access to that. Well, zooming out a little bit today to the the title of our panel around the future of capital allocation is Bitcoin. You know, from a 30,000 ft view, where are we in that journey and and what do you think the next couple years looks like? I still think we're so early in that journey. There's so little allocation in so many portfolios. Uh we were talking last night about the Bitcoin for corporations. I know that's been a theme in a couple of the conversations here. It's still very early. I I had said on a panel earlier this year or a discussion earlier this year. It's one thing I think that we we missed with the all the digital asset treasury companies. We started with Bitcoin on the balance sheet for corporations broadly and somehow the topic of digital asset treasury companies just totally consumed that topic and ran away with the narrative and there's still work that has to be done on really thinking about Bitcoin on the balance sheet for for a broad set and and not dominating the whole company, but just having a maybe even just a single percentage of exposure on that balance sheet and what does that look like and what does it do to that balance sheet? If if not to put you on the spot, but since we're taking a long-term view here, what do you think it's going to take in terms of decades, infrastructure, regulatory before we see a bank like Morgan Stanley or a regulated financial institution be able to take that leap and put Bitcoin on the balance sheet? >> Bitcoin on the balance sheet. Uh you know, I think if we continue to see the progress that we've made over the last 16 months or so in regulatory, that's something that you you may see going forward. It's not totally out of the question. But I think you need to see I think the other thing, too, is we we were talking about SAB 121 rolling back on on the capital treatment, but it's not just that that holds us back. It's Fed guidance. It's Basel guidance. When when you're a large G-SIB bank, it's not just one agency that you report to. You have many oversight groups that that you have to attend to. So, we need a little bit more alignment across the board with some of those agencies. We're also global. So, it's one thing to focus on the US, but every jurisdiction has its own rules and regs around the space and and we're still getting comfortable with that globally. Well, thank you very much, Amy. This has been great. Thank you. >> [music] >> Every year this community comes together to celebrate, [music] to debate, to build what comes next. >> [music] >> And every year the stage gets bigger. >> [music] >> Sound money center stage. So, where do you go [music] to celebrate the next chapter in Bitcoin history? You come home. >> [music] >> Nashville, July 2027.