Compliance inspection imminent?
Former Chief of the SEC’s Office of Internet Enforcement, John Reed Stark, has issued a stern warning to Morgan Stanley about its recent foray into Bitcoin ETFs. Stark criticized the bank's move, suggesting it could trigger "the largest SEC and FINRA examination sweep in history." Last week, Morgan Stanley, a major U.S. financial institution, began offering Bitcoin ETFs to its clients, signaling a significant step for institutional cryptocurrency adoption.
Morgan Stanley’s Death Wish
Stark described the decision as a "death wish," implying that allowing its 15,000 brokers to market Bitcoin could expose the bank to intense regulatory scrutiny. "I worked in the SEC Enforcement Division for almost 20 years," Stark stated, highlighting his extensive experience and his belief that SEC and FINRA examiners would meticulously review records of Bitcoin sales, easily identifying any compliance violations. Stark ominously wished the bank's compliance director "good luck," underscoring the potential challenges ahead.
Largest inflows in months
On August 2, Morgan Stanley authorized its 15,000 financial advisors to pitch clients with net worths exceeding $1.5 million on ETFs managed by BlackRock and Fidelity. As reported by Lookonchain, Bitcoin ETFs saw a net inflow of 4,698 BTC, equating to approximately $283.87 million, on August 9. Notably, iShares recorded inflows of 2,641 BTC valued at $159.57 million, and currently holds 347,608 BTC, worth about $21 billion.
This development highlights the growing interest and investment in cryptocurrencies among institutional investors, despite regulatory warnings and potential compliance challenges. As Morgan Stanley navigates these waters, the outcomes could significantly influence the future of institutional cryptocurrency investment.
