Written by: Yi He
This article examines Morgan Stanley’s stance on cryptocurrencies and the current state of the cryptocurrency industry. Morgan Stanley’s leadership (CEO James Gorman and Chief Investment Officer Lisa Shalette) acknowledge that cryptocurrencies are no longer a fleeting fad, but emphasize their high volatility and speculative nature. Internally, Morgan Stanley’s research and wealth management divisions view cryptocurrencies (especially Bitcoin) as an emerging asset class—similar to “digital gold”—that can provide portfolio diversification for suitable investors [1][2]. The company has been gradually expanding client access: by 2025, all Morgan Stanley Wealth clients (including retirement accounts) will be able to invest in Bitcoin and Ethereum funds [3][4], although the bank recommends a conservative allocation (0-4% of assets) [5][6]. Morgan Stanley also emphasizes that regulatory clarity (such as new U.S. stablecoin laws and ETF approvals) is accelerating institutional adoption [7][8].
The main legal bases include the U.S. Securities and Commodity Act (the Securities Act of 1933/Exchange Act of 1934 under the jurisdiction of the SEC, the Investment Company Act of 1940, and the Commodity Exchange Act under the jurisdiction of the CFTC), U.S. anti-money laundering rules (the Bank Secrecy Act under the jurisdiction of FinCEN[9]) and specific legislation (such as the GENIUS Act of 2025 for stablecoins[10]). Globally, the EU’s Crypto Asset Market Regulation (MiCA) (effective in 2025)[11], the Payment Services Act (PSD 2) and anti-money laundering directives provide the framework. The main regulatory bodies include the U.S. SEC, CFTC , FinCEN and OCC[12][9]; European regulators ESMA and EBA (which oversee MiCA)[11]; the UK Financial Conduct Authority (FSMA); and international bodies (BIS, Basel Committee, FATF) that set standards[13][14]. These laws and bodies shape the global legal environment for cryptocurrencies.
Key global regulators: The US SEC (Securities and Securities Regulatory Commission) and CFTC (Commodity Regulatory Commission) are key; FinCEN (Treasury) enforces anti-money laundering/KYC rules; OCC , FDIC and the Federal Reserve supervise bank participation. In the EU, ESMA/EBA oversees the implementation of MiCA and anti-money laundering rules. Asian regulators include the Monetary Authority of Singapore (Payment Services Act) and the Financial Services Agency of Japan; the UK Financial Conduct Authority regulates exchanges and is drafting a stablecoin framework. International institutions such as the Financial Action Task Force ( FATF ) – and its “Travel Rules” – and the Bank for International Settlements (BIS)/Basel Committee provide cross-border guidance.[15][13]
References: This analysis draws on research and news sources from Morgan Stanley. Key references include Morgan Stanley Wealth Management Reports [1][2], Morgan Stanley podcast recordings [16][17], and financial media outlets (Reuters, Business Insider, Blockworks) on Morgan Stanley’s cryptocurrency strategy [18][19][5]. Regulatory context is supported by legal analysis [12][9][11] and cryptocurrency industry reports [20][10]. Each reflects up-to-date data on the cryptocurrency market and policies.
I. Morgan Stanley's Cryptocurrency Views and Strategies
Morgan Stanley’s leadership has been cautious but gradually embracing cryptocurrencies. Former CEO James Gorman (now executive chairman) noted that “Bitcoin is not going away,” but called it “pure speculation” and said it should play only a “very small role” in the portfolios of wealthy investors.[19] He warned of “huge regulatory changes and industry disruption” and a lack of intrinsic value in cryptocurrencies.[19] Consistent with this cautious approach, Morgan Stanley’s Global Investment Committee (GIC) explicitly views cryptocurrencies as speculative assets; its October 2025 report describes cryptocurrencies as an “emerging, speculative and increasingly popular asset class,” focusing on Bitcoin as a scarce “digital gold.”[1] GIC does not recommend mandatory allocations, but suggests capping them at 2-4% in the most aggressive model portfolios.[1][6] In practice, Morgan Stanley Wealth Management recommends moderate cryptocurrency exposure (typically 0-3%), depending on risk tolerance.[6] The following chart shows the cryptocurrency market cycle and adoption (2016-2025).
Meanwhile, Morgan Stanley’s research team highlighted the transition of cryptocurrencies into mainstream finance. A Morgan Stanley podcast in November 2025 (hosted by Morgan Stanley analyst Michael Cypris and strategist Danny Galindo) noted that cryptocurrencies have “moved from the financial periphery to being considered a legitimate part of mainstream asset allocation”[21]. They noted the growing interest from both retail and institutional clients following recent U.S. elections and legislation, such as the “GENIUS Act” on stablecoins[21][22]. Morgan Stanley now allows financial advisors to discuss Bitcoin funds with all clients, not just ultra-high-net-worth clients, and has expanded advisory access[17][3]. Morgan Stanley has also authorized clients to trade certain cryptocurrency products: for example, starting in late 2025, advisors can recommend Bitcoin exchange-traded products ( ETPs ) in brokerage or retirement accounts[3] and in early 2026, the company plans to offer direct trading of Bitcoin, Ethereum, and Solana through its E*Trade platform[23][4].
Financially, Morgan Stanley’s internal research (as well as research from collaborating firms like BlackRock and Fidelity) now considers cryptocurrencies as part of a broader class of physical assets. GIC refers to Bitcoin as “a form of digital gold,” classifying it as a physical asset.[24][2] The bank’s chief investment officer, Lisa Shalette, recently wrote that cryptocurrencies are “a speculative and increasingly popular asset class that many—but not all—investors want to get involved in.”[5] However, the firm advises extreme caution: Morgan Stanley’s portfolio model places cryptocurrencies at the very bottom of the risk spectrum. For medium-risk clients, it recommends no more than 0-2% in cryptocurrencies, and even for aggressive allocations, it limits them to 4%.[6][5] This echoes similar guidelines from other Wall Street banks.
II. Market Adoption and Development
The global cryptocurrency market has grown significantly, despite high price volatility. The total market capitalization of cryptocurrencies recently surpassed $4 trillion for the first time.[20] A 16 Z’s 2025 report highlights that cryptocurrencies are now “an important part of the modern economy”: leading institutions such as Visa, BlackRock, Fidelity and JPMorgan Chase offer cryptocurrency products, and blockchains process thousands of transactions per second.[25] Stablecoins, in particular, underpin trillions of transactions (comparable to major payment systems).[26] By the end of 2025, there are an estimated 40 to 70 million active cryptocurrency wallets globally (out of approximately 700 million cryptocurrency users).[27] This indicates that adoption is accelerating, particularly in emerging markets.
As can be seen from the cryptocurrency market cycle and adoption (2016-2025) chart above, there is a lot of volatility, but overall there is continuous growth.
Over the past decade, cryptocurrencies have exhibited repeated cycles of growth and correction. The chart above (from industry data) shows how major price peaks ( the ICO boom of 2017, the DeFi/NFT surge of 2021, and the recent Bitcoin/ETF rally) have coincided with a surge in active developers and user wallets. Notably, the 2025 cycle reached record metrics: market capitalization surpassed $4 trillion and tens of millions of users held cryptocurrencies. These trends support Morgan Stanley’s view that cryptocurrencies are “going mainstream” [21].
Institutional participation is also on the rise. Since 2024, dozens of large asset management firms (BlackRock, Fidelity, etc.) have launched spot Bitcoin/Ethereum ETFs, driving billions of dollars in inflows[22]. Morgan Stanley itself filed an S-1 filing in early 2026 to launch Bitcoin and Solana ETFs[18] and is launching cryptocurrency custody and trading services. On the exchange side, trading volumes are climbing: cryptocurrency futures and options trading volumes on the Chicago Mercantile Exchange more than tripled in 2025, and U.S. brokers reported dozens of tokens available to their clients.
For example, about 20% of Robinhood’s revenue comes from cryptocurrency trading[29]. Traditional brokers such as Charles Schwab now hold billions of dollars in cryptocurrency ETFs[30] and are moving toward offering spot cryptocurrency trading by 2026. Morgan Stanley analysts point out that regulatory deregulation (such as CME 24/7 trading starting in 2026 and new U.S. listing rules) is expected to further unleash cryptocurrency trading volume[31][32].
Despite the high enthusiasm, Morgan Stanley emphasizes that adoption is still in its early stages. Research analysts have observed that early growth in cryptocurrencies was primarily driven by retail demand, with institutions only recently beginning to experiment with small allocations.[33][34] Most institutions today have very modest cryptocurrency allocations (typically only 1-2% of Bitcoin) and are geared towards specific objectives (inflation hedging, diversification).[35][6] Morgan Stanley notes that institutional allocations "will not happen overnight"—they require regulatory certainty and macroeconomic clarity.[34] Consistent with this, Morgan Stanley's current advice is conservative: clients should not "always overweight" but should only consider cryptocurrency exposure if it aligns with their risk profile (e.g., digital gold enthusiasts, tech believers, or diversification seekers).[17][6]
III. Regulatory and Legal Background
The development of the cryptocurrency industry depends heavily on the legal framework and regulatory clarity—a fact Morgan Stanley frequently points out. Significant regulatory developments in recent years have boosted the confidence of institutional investors. For example, in 2024, the U.S. SEC approved the first spot Bitcoin and Ethereum ETFs, a milestone Morgan Stanley analysts called "legalizing cryptocurrencies as an investable asset class."[36] In early 2026, Morgan Stanley itself applied for Bitcoin and Solana ETFs.[18] This reflects a broader shift: banks are moving from passive custodians to active advisors on cryptocurrencies.
In the United States, cryptocurrency regulation currently relies on existing laws and agencies. The SEC classifies many tokens as securities (leading to enforcement actions against exchanges such as Coinbase and Binance)[12], while the CFTC regulates cryptocurrency derivatives and generally classifies Bitcoin as a commodity under the Commodity Exchange Act[37]. The Treasury Department’s FinCEN enforces anti-money laundering rules (classifying cryptocurrency companies as money services businesses since 2013)[9], and the IRS taxes cryptocurrencies as property (capital gains)[38]. Other U.S. initiatives include the GENIUS Act of 2025 (creating a federal framework for stablecoin issuers)[10] and proposals such as the Infrastructure Act (tax and reporting rules). Even without a single “cryptocurrency law,” regulators are applying securities, commodity, banking, and money transfer laws to digital assets[12][9].
Globally, regulatory frameworks are evolving. The EU’s Crypto Asset Markets Regulation (MiCA) came into full effect in 2025[11], creating the first unified framework for crypto asset service providers and stablecoins. Implementation has been uneven, but regulators (ESMA, EBA and national regulators) are refining technical rules[11]. Japan and Singapore have also developed comprehensive cryptocurrency laws (e.g., Japan’s Virtual Asset Service Providers Rules and Singapore’s Payment Services Act), regulating exchanges and token offerings. The People’s Bank of China has banned private cryptocurrencies but is promoting its digital yuan CBDC. Many countries—from the UK and South Korea to Australia and Canada—are actively drafting cryptocurrency-specific regulations (often focusing on anti-money laundering/KYC, consumer protection and stablecoins). Notably, Asia has taken steps toward stablecoins and interoperability: for example, Hong Kong implemented a stablecoin regulatory framework in 2023, and Singapore is finalizing its own stablecoin rules[10].
International institutions also influence cryptocurrency policy. The Financial Action Task Force (FATF) has extended its anti-money laundering/counter-terrorist financing “travel rule” to cryptocurrency transfers.[39] The Bank for International Settlements (BIS), the Basel Committee, and the Financial Stability Board (FSB) have issued standards for bank exposure and stablecoins.[13][14] For example, Basel is reviewing its prudential capital rules for banks’ cryptocurrency holdings.[40] The BIS has issued recommendations on tokenization and CBDCs. Morgan Stanley analysts closely follow these developments: they note that each step toward clarity, such as the GENIUS Act or SEC guidance on tokenization, tends to generate more institutional interest.[7][10]
IV. Investment Risks and Considerations
Morgan Stanley has repeatedly warned of the high volatility and speculative nature of cryptocurrencies. In its wealth management disclosures, Morgan Stanley emphasizes the total loss risk of cryptocurrency products due to volatility, custody issues, uncertain valuation models, and limited regulatory oversight.[41] Internally, Morgan Stanley research highlights that while Bitcoin has “proven its technical viability,” it remains a speculative investment until its volatility declines.[42][43] Morgan Stanley strategists describe three main investor mindsets: Bitcoin as digital gold (inflation hedge), cryptocurrency as a risk technology (growth play), or cryptocurrency as a portfolio diversification tool.[44] To hedge against risk, the firm’s Global Investment Committee recommends that cryptocurrency exposure should be rebalanced periodically (e.g., quarterly) and kept small.[5] Lisa Sallet’s October 2025 note classifies Bitcoin as a “real asset” and does not recommend a fixed allocation; instead, advisors may only include cryptocurrency as part of a diversified portfolio rather than a core holding.[5] The overall message is that while cryptocurrencies are gaining recognition for their potential, they must be handled with caution: Morgan Stanley emphasizes portfolio balancing and risk monitoring (e.g., using automated tools to prevent over-concentration) [5][45].
V. Morgan Stanley's shift from skepticism to nuanced acceptance of limited allocations
In summary, Morgan Stanley views cryptocurrencies as an evolving emerging “mainstream” asset class—one with a strong investment narrative but also profound risks. The firm’s official stance has shifted from skepticism (emphasizing the speculative volatility of cryptocurrencies) to a nuanced endorsement of limited allocations. Morgan Stanley now offers its advisors the ability to serve clients interested in cryptocurrencies (particularly Bitcoin funds) while imposing conservative guidelines [6][5]. This reflects the current state of cryptocurrencies: major financial institutions and billions of dollars are flowing into digital assets, global regulation is trending toward clearer rules, and blockchain technology has proven scalable. Nevertheless, the market is still grappling with booms and busts (as demonstrated by recent cycles), and the legal framework is still under development.
For investors, Morgan Stanley’s message is clear: cryptocurrencies are worth studying and may play a small role in a diversified portfolio—but be fully aware of the legal, regulatory and volatility risks.[19][42]
[1] [2] [42] [43] Asset Allocation Considerations for Cryptocurrency
[3] [5] Morgan Stanley opens crypto fund access to all wealth clients - Blockworks
[4] [8] [18] Morgan Stanley files for bitcoin, solana ETFs in digital assets push | Reuters
[6] [7] [16] [17] [21] [22] [28 ] [29 ] [30] [31] [32] [33] [34] [35] [36] [44] Cryptocurrencies: Going Mainstream
[9] [12] [13] [14] [37] [38] Cryptocurrency laws and regulations
[10] [11] [15] [39] [40] 2025 Crypto Regulatory Round-Up
[19] Morgan Stanley's Gorman on Bitcoin, Bank Failures, Recession, Rate Cuts - Markets Insider
[20] [25] [26] [27] State of Crypto 2025: The year crypto went mainstream - a16z crypto
[23] [24] [45] Morgan Stanley Unleashes Crypto Funds for All Wealth Clients – Is a Market Surge Imminent? — TradingView News
[41] Investing in Crypto: Diversifying Your Portfolio | Morgan Stanley
