Morgan Stanley applies for Ethereum trust product, plans ETF conversion strategy

Source: TokenPost Original Title: Morgan Stanley Applies for Ethereum($ETH) Trust… Strengthening Strategy for ETF Conversion Original Link: Morgan Stanley has submitted registration documents to the U.S. Securities and Exchange Commission (SEC) for the “Morgan Stanley Ethereum Trust,” demonstrating a formal intention to enter the cryptocurrency market. This is a significant move by a major Wall Street financial institution to expand beyond Bitcoin into Ethereum spot products.

Strategic Significance of the Trust Application

The S-1 registration document was filed with the SEC on January 6. The trust will be established as a Delaware corporation, holding Ethereum and providing investors with returns based on price fluctuations. Morgan Stanley Investment Management will handle operations, with CSC Delaware Trust serving as the custodian. The structure is designed with the future possibility of converting to an ETF through a stock exchange listing in mind.

Current State of the Ethereum Spot ETF Market

The total net assets of the Ethereum spot ETF market currently reach $20.06 billion, with an average daily trading volume of $1.72 billion, accounting for about 5% of Ethereum’s total market capitalization, reflecting significant institutional capital inflows.

In terms of market share, BlackRock’s ETH AUM of $11.58 billion holds an absolute lead, with a daily trading volume exceeding $1 billion. Grayscale’s ETHE faces outflows of $5 billion due to higher fees. Low-fee ETFs and Fidelity’s FETH maintain stable long-term capital inflows. Experts believe that fee efficiency and liquidity have become key factors influencing investor choices.

Strategy for Paving the Way for ETF Conversion

This trust application appears to be a legal procedure on the surface but is essentially a preparatory stage for ETF conversion. Grayscale and VanEck initially launched as trusts and successfully converted into ETFs. BlackRock and Fidelity received SEC approval in July 2024 to directly launch Ethereum spot ETFs.

Recently, Morgan Stanley has consecutively applied for Bitcoin trusts, Solana-based trust products, and is preparing Bitcoin, Ethereum, and Solana trading services through the E-Trade platform. This is not a one-off action but a strategic expansion into the digital asset market. This trend is closely related to the more relaxed regulatory environment during the Trump administration.

Practical Value of Trust Products

Whether or not they are ultimately converted into ETFs, Ethereum trust products hold significant importance. They enable ordinary investors to easily gain exposure to Ethereum through brokerage accounts without complex wallet setups. While they do not offer staking yields or participation in on-chain activities, their institutional appeal persists due to structured operation and tax reporting convenience.

Morgan Stanley’s Ethereum trust application, regardless of ETF approval, helps lower the barrier to participation in the cryptocurrency market. Traditional asset management firms are beginning to focus on asset classes beyond Bitcoin, indicating the potential for market structure expansion.