Morgan Stanley Could Face Big Problems With Bitcoin ETF Promotion, Says Former SEC Official
Date: 2024-08-12 Author: Oliver Abernathy Categories: CRYPTO PAYMENTS
Morgan Stanley, the largest asset manager in the United States, could face increased regulatory scrutiny after allowing its team of financial advisers to promote Bitcoin spot exchange-traded funds (ETFs), according to John Reed Stark, a well-known cryptocurrency skeptic and former SEC official.
“By allowing its 15,000 brokers to promote Bitcoin, Morgan Stanley has essentially voluntarily opened the door to the largest SEC and FINRA audit in history,” Stark wrote in a statement on X (formerly Twitter) on August 9.
Stark added that it would be extremely easy to detect violations in such a situation: “Finding violations would be as easy as shooting fish in a barrel. So whoever is the chief compliance officer at Morgan Stanley right now is going to have a hard time.”
Regulators Will Have Full Access to Documents
Stark emphasized that compliance officers and enforcement officers from both the SEC and FINRA will have instant access to all documents, including emails, text messages, voicemails, and phone conversations related to bitcoin sales to retail investors.
“This vast and easily accessible collection of evidence will be available to the SEC and FINRA not only upon request, but also during an unannounced on-site inspection,” Stark said, calling the move Morgan Stanley’s “death wish.”
Criticism After Morgan Stanley Approves Bitcoin ETF Promotion
The criticism comes after a source familiar with the matter told Cointelegraph on August 7 that Morgan Stanley had given its 15,000 financial advisors permission to recommend spot Bitcoin ETFs to their wealthy clients.
The company currently only approves two products: BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund. However, crypto industry analysts believe the move could have a significant impact on Bitcoin.
Significant Fund Inflows Expected
Dragonfly VC Fund Manager Partner Haseeb Qureshi on Platform X said he expects a significant increase in inflows in the second half of the year: “Do you have any idea how big this is?” the DeFi investor added.
Since the spot Bitcoin ETF approval on January 11, the products have attracted $17.3 billion, according to Farside.
