Morgan Stanley has significantly expanded its Digital Asset Lab operations by adding rooms across New York, Glasgow and Bangalore, bringing the total coverage to approximately 20,000 square feet. According to latest reports, the lab operates off the bank's core systems to allow employees to examine blockchain applications without testing them on the bank's main infrastructure. Amy Oldenburg, who leads the lab, told Disruption Banking that the work will cover tokenized deposits, central bank digital currencies, money-market funds, and DeFi vaults, with the lab designed to test stablecoins, tokenization, and DeFi applications without putting production rails at risk. Megan Brewer, who leads market innovation and labs at the firm, explained that the facilities resemble data centers and join Morgan Stanley's existing network of innovation labs that give employees dedicated space to explore emerging technologies without putting the bank's core systems at risk.
The lab operates under Morgan Stanley's existing innovation framework that evaluates approximately 270 projects annually, with the digital asset lab prioritizing understanding emerging technologies like DeFi vaults before implementation to prevent risks to existing platforms. The lab will examine tokenized deposits, digital currencies, money-market funds, and DeFi vaults as reported by Bloomberg. Oldenburg indicated that among the questions for the bank is how software could carry out investment strategies around the clock. The tests will cover different parts of a transaction, from the form money takes when it moves to how an investment is recorded or managed. A tokenized deposit represents a claim on money held at a bank, while a stablecoin is issued against a separate pool of backing assets.
Morgan Stanley has become a major player in crypto trading and ETFs, becoming the first bank to launch a spot Bitcoin ETF with Morgan Stanley Bitcoin Trust (MSBT) in April. The firm also gained approval for its Ethereum and Solana ETFs, charging a low fee of 0.14% and structured to pass staking rewards through to investors. The bank's E*TRADE platform completed its rollout of Bitcoin, Ether, and Solana trading for eligible clients in July, with each transaction carrying a 0.50% fee. The platform gives eligible U.S. brokerage customers direct access to the three assets through Zerohash's underlying trading and custody infrastructure. MS stock edged 0.5% lower in morning trade amid mixed broader market conditions, while retail sentiment around MS remained in the 'bullish' zone on Stocktwits.
In April, Morgan Stanley Investment Management launched the Stablecoin Reserves Portfolio (MSNXX) within its Institutional Liquidity Funds trust. According to earlier reports, the firm described it as a government money-market fund designed for the reserve needs of payment stablecoin issuers under the U.S. GENIUS Act. The portfolio holds cash, short-dated U.S. Treasury securities, and overnight repurchase agreements backed by Treasurys, with investors other than stablecoin issuers also able to hold shares.
Morgan Stanley said in July that it expected to move ETRADE's crypto service to Morgan Stanley Digital Trust, its proposed national trust bank, later in 2026. The bank's proposed Digital Trust bank would eventually take over the crypto service that Zerohash currently supports for ETRADE. Notably, Morgan Stanley has disclosed XRP crypto holdings through ETFs and increased holdings in Ripple-backed Evernorth Holdings's SPAC partner Armada Acquisition Corp II, indicating the bank's interest in XRP and potential exploration of XRP ETFs and trading in the future. Oldenburg's team will continue looking at digital cash equivalents and existing trading products, with any new announcements indicating whether the lab has successfully tested products for potential market release.
