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Morgan Stanley’s venture into Bitcoin ETFs is under intense scrutiny, with an ex-SEC official branding the move a 'Death Wish' and predicting a looming regulatory storm.
Bitcoin ETF Move Called 'Death Wish'
The decision by American banking firm Morgan Stanley to provide its brokers access to Bitcoin ETF has been criticized by ex-SEC officer John Reed Stark. Although many in the digital currency ecosystem view the bank's decision favorably, John Reed Stark views it negatively, calling it a "death wish."
According to Coingape, the former SEC officer recently posted on X about how the bank's 15,000 registered brokers could be subject to regulatory oversight. According to John Reed, who has worked with the SEC and FINRA before, the bank's linked broker is likely to face action from both organizations.
Risk of Regulatory Investigation
The Bitcoin move by Morgan Stanley, in his estimation, constitutes a willing invitation to investigate. The ex-official is certain that the SEC will not take any chances because of its reputation for strict regulation.
Wall Street demand has skyrocketed since the launch of spot Bitcoin ETF products in January. Legacy banks are adjusting their stance because of the requests of many institutional investors for this product. Although other banks have experimented with blockchain and crypto products in the past, the ETF bets on Bitcoin and Ethereum gave the product a significant boost in credibility.
Morgan Stanley’s Bitcoin ETF Risks Scrutiny
John Reed did not suggest that the bank's brokers are unscrupulous, but he does think that the widespread use of Bitcoin can facilitate any investigation that may occur.
Other financial institutions, including Wells Fargo, are interested in marketing Bitcoin to complement Morgan Stanley's effort. Financial institutions often do this when they want to outyield competing emerging assets.
The relationship between cryptocurrency and financial operations has been tarnished throughout history, even though no clear regulations govern the two. Financial institutions still have a ways to go in the ongoing dispute between Custodia Bank and the Federal Reserve Master Account.
Future Bitcoin Regulations May Tighten
At the same time, new political and economic forces may lead to stricter Bitcoin laws. There is a better chance of favorable rules if Donald Trump is elected president. His current crypto policies, in contrast to those of Vice President Kamala Harris, provide the basis for this.
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