Morgan Stanley Wealth Management has launched a new referral arrangement with Galaxy Digital to expand its cryptocurrency offerings for high-net-worth clients. According to the Friday announcement, eligible clients can now convert directly held Bitcoin, Ethereum, and Solana into spot crypto ETFs through a partnership with Galaxy Digital, with the converted ETF shares serving as collateral for loans. The partnership allows investors to move crypto exposure into regulated investment vehicles without selling their digital assets first, utilizing an in-kind conversion mechanism approved by the U.S. Securities and Exchange Commission in July 2025. As reported by Galaxy Digital, Zane Glauber, Global Head of Distribution, emphasized the streamlined approach: "We are excited to support referrals from Morgan Stanley Wealth Management to offer an efficient and secure path to access spot crypto ETPs. Streamlined onboarding and lowered transaction minimums make it easier for clients to integrate digital assets alongside traditional investments, supporting a holistic approach to wealth management."
The arrangement includes significant improvements to accessibility for Morgan Stanley clients. Galaxy Digital has reduced the minimum lending transaction size for Morgan Stanley referred clients to $5 million from $25 million, making the service more accessible to a broader range of wealth management clients. The process is designed to reduce in-kind crypto-to-ETP onboarding times by as much as 75%, according to the companies' announcement. The $5 million minimum transaction threshold underscores that this service is designed for institutional-grade wealth, not retail investors. Under Galaxy's model, a client lends specified digital assets to Galaxy, and once the company determines it can settle such loan in ETP shares, Galaxy will coordinate an in-kind creation with an Authorized Participant, delivering ETP shares into the client's account of their choosing. The timing proves particularly strategic as Bitcoin trades near $60,749 after slipping about 4% in a day, while Ether sits around $1,588 and Solana near $65, both down sharply over the past month.
The SEC's approval of in-kind conversions for spot crypto ETFs in July 2025 marked a turning point for the industry, allowing investors to exchange directly held crypto assets for shares in spot crypto ETFs without first selling the digital assets for cash. This regulatory green light addresses previous challenges where cash-based ETF creation and redemption created inefficiencies and tax consequences for large in-kind transfers. The new mechanism aligns crypto ETFs more closely with traditional commodity and equity ETFs, where in-kind transactions are standard, potentially allowing wealthy clients to defer capital gains taxes while gaining the operational and regulatory benefits of ETF ownership. The current onboarding timelines for these transactions can exceed four weeks, but through this referral capability, onboarding times may be reduced by as much as 75% in some cases. Because the crypto is lent rather than sold, the process avoids a taxable disposal and the execution risk of converting to cash.
Alison Nest, Head of Investment Solutions Products at Morgan Stanley, explained the bank's approach to the partnership. As reported by Morgan Stanley, the bank has been active in decentralized finance and views the referral capability with Galaxy as a way to help wealth management clients integrate digital assets into their portfolios through an institutional framework. The arrangement creates a connection between traditional finance and decentralized finance while giving investors additional ways to diversify their holdings. The Morgan Stanley Bitcoin Trust (MSBT), which launched on April 8 as the cheapest US Bitcoin ETF, anchors the product set, with the bank having already cleared its wealth advisors to recommend Bitcoin funds to clients. The deal builds on Galaxy's New York license and its earlier work launching European crypto ETPs with DWS. The arrangement keeps client assets and fees inside Morgan Stanley's ecosystem while handing Galaxy the lending and creation work, with the question whether lower minimums translate into steady ETP inflows during a softer market being answered in the coming weeks.
For Galaxy Digital, the partnership adds another institutional channel to its lending and asset management business. According to company figures, Galaxy generated $505 million in adjusted gross profit during 2025 from its trading, lending, asset management, and staking services division. The company, founded by Mike Novogratz, has been a leading institutional crypto services provider, offering trading, asset management, and advisory services. The Morgan Stanley referral arrangement comes only days after this announcement, demonstrating continued expansion of Galaxy's institutional services and giving the firm a first-mover advantage in this niche market. Earlier this week, Galaxy launched an institutional over-the-counter prediction-market trading desk, further expanding its institutional financial services offerings. Galaxy is a global leader in digital assets and data center infrastructure, delivering solutions that accelerate progress in finance and artificial intelligence, with its 1.6 GW Helios campus in Texas positioning it among the largest and fastest-growing data center developers in North America.
