Wall Street bank Morgan Stanley recently filed an application with the U.S. Securities and Exchange Commission (SEC) to launch a spot Ethereum ETF, further expanding its strategy of penetrating the digital asset sector. This move comes just one day after Morgan Stanley simultaneously filed applications for Bitcoin and Solana ETFs, demonstrating the bank's rapid deployment pace and increasing priority given to the cryptocurrency market.
According to the S-1 filing published on the SEC system, the new product, called Morgan Stanley Ethereum Trust, is designed to directly hold ETH and track its price fluctuations in the market. Notably, the fund not only reflects the price of ETH but also plans to generate additional yields through Staking a portion of its Ethereum holdings, leveraging the Ethereum network's Proof-of- Stake consensus mechanism after The Merge.
However, unlike some other spot Ethereum ETFs on the market, Morgan Stanley chooses a more cautious approach to handling Staking returns. Instead of directly distributing Staking income to investors, these returns are indirectly reflected in the fund's net asset value (NAV). This approach simplifies the product structure in terms of operation and compliance, while limiting legal risks associated with periodic income payments, given the still unclear legal framework for Staking ETFs in the US. Previously, some other issuers such as Grayscale have experimented with a model of directly distributing Staking income to shareholders, creating a significant difference in product design.
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The filing for an Ethereum ETF comes shortly after Morgan Stanley simultaneously filed for Bitcoin and Solana spot ETFs, meaning that within approximately 24 hours, one of the world's largest asset managers and the sixth-largest bank in the US by assets under management launched three cryptocurrency ETF filings. Bloomberg Intelligence ETF analysts James Seyffart and Eric Balchunas noted that this chain of moves surprised the market, as Morgan Stanley Capital previously been XEM relatively cautious compared to some of its Wall Street rivals in the crypto sector.
Morgan Stanley's new filings further add to the growing wave of cryptocurrency investment products, driven by increasing demand from large financial institutions. Since spot Bitcoin ETFs were approved and officially began trading in early 2024, volume has exploded. The cumulative trading value of spot crypto ETFs in the US recently surpassed $2 trillion, reflecting the growing acceptance of digital assets within the traditional financial system.
