Morgan Stanley Files for Spot Ethereum ETFs as TradFi Deepens Crypto Exposure

Group 1 - Morgan Stanley has filed for spot Ethereum exchange-traded funds (ETFs), aiming to track ETH's price and pass staking rewards to shareholders, marking a significant move in the crypto ETF market [1][3] - The bank also submitted ETF applications for Bitcoin and Solana, indicating its first involvement in the crypto ETF segment, approximately two years after the US saw a rise in crypto-focused ETFs [2][3] - This filing reflects a broader trend among established Wall Street institutions to increase their engagement with digital assets, as Morgan Stanley manages $1.6 trillion in assets and seeks to broaden client exposure to cryptocurrencies through regulated investment products [3] Group 2 - Bank of America has begun allowing wealth management advisors to recommend a portfolio allocation of 1% to 4% in cryptocurrency, following similar moves by other major firms like BlackRock and Fidelity [4] - Despite the endorsement from Morgan Stanley, the crypto market is experiencing heightened volatility, with a significant decline in market capitalization, shedding approximately $600 billion since October [5][7] - Institutional ownership in the Bitcoin market has increased from 20% to 28%, indicating a shift towards professional holders amidst a backdrop of retail investors facing losses [6]