Morgan Stanley is now letting clients borrow up to 50% of the value of their Bitcoin ETP holdings.

The move is part of a broader push by Morgan Stanley Wealth Management to weave digital assets into the fabric of traditional finance. Through a referral arrangement with Galaxy Digital announced on June 5, the firm is enabling eligible clients to lend cryptocurrencies, including Bitcoin, Ether, and Solana, directly to Galaxy and receive shares in spot crypto exchange-traded products in return.

How the structure actually works

Morgan Stanley’s solution has clients send crypto to Galaxy Digital and get back ETP shares, including shares of Morgan Stanley’s own Bitcoin Trust, known as MSBT. Those shares land directly in the client’s brokerage account.

Once the crypto is wrapped in an ETP structure, it behaves like any other security. That means margin borrowing, securities lending, and consolidated reporting all become available.

The lending component allows clients to borrow up to 50% of their Bitcoin ETP holdings’ value. A 50% loan-to-value ratio is conservative by traditional lending standards, but Bitcoin has historically been capable of 30% drawdowns in a matter of days.

The minimum investment threshold for referred clients has been lowered to $5 million. Onboarding times for the referral process have reportedly been reduced by up to 75%, a nod to the efficiency gains made possible by the SEC’s 2025 approval for in-kind creations of crypto ETPs.

MSBT and the institutional crypto toolkit

Morgan Stanley’s Bitcoin Trust launched on April 8 and charges a 0.14% fee, making it one of the cheaper options in the spot Bitcoin ETP landscape. The trust tracks the CoinDesk Bitcoin Benchmark Rate.

As of June 9, MSBT has accumulated roughly $252 million in assets under management.

The in-kind creation mechanism allows investors to swap crypto directly for ETP shares rather than selling crypto for cash and then buying ETF shares, which would trigger a taxable event. The SEC greenlit this structure in 2025.

Galaxy Digital’s role as the counterparty for the crypto lending side is notable. The firm, founded by Mike Novogratz, has positioned itself as a key institutional bridge between crypto markets and traditional finance.

What this means for investors

Consider a scenario where a client borrows $500K against $1 million in Bitcoin ETP holdings. If Bitcoin drops 30%, those holdings are now worth $700K, and the effective LTV jumps to roughly 71%. That’s margin call territory in most lending frameworks.

The $5 million minimum and the requirement to work through the Galaxy referral arrangement mean this isn’t a product for retail investors. The infrastructure being built here — ETP wrappers, margin lending, securities lending, consolidated reporting — is exactly the kind of plumbing that eventually scales down to smaller account sizes.