Morgan Stanley Files for Spot Ether ETF Amid Growing Crypto Product Lineup

According to Cointelegraph, Morgan Stanley has submitted a filing to the U.S. Securities and Exchange Commission (SEC) to introduce a spot Ether exchange-traded fund (ETF), expanding its array of cryptocurrency offerings. The investment bank filed an S-1 form to create the Morgan Stanley Ethereum Trust, an ETF designed to purchase, hold, and track the price of spot Ether (ETH). The filing, dated Tuesday, specifies that the fund will not engage in speculative selling of Ether for additional returns. Instead, it plans to utilize third-party staking service providers to stake an unspecified portion of its holdings for passive yield. This marks Morgan Stanley's third cryptocurrency ETF filing, following two similar submissions on Tuesday for a Bitcoin (BTC) ETF and a Solana (SOL) ETF. Morgan Stanley Investment Management is listed as the sponsor of the ETF, with CSC Delaware Trust Company serving as the Delaware trustee. Details regarding the fund’s custodians and exchange were not included in the S-1 filing. The move underscores Morgan Stanley's increasing interest in the crypto sector, as the bank reportedly allowed its financial advisors to recommend crypto funds to clients with individual retirement accounts (IRAs) and 401(k)s starting in October 2024. The potential approval of the new fund by the SEC could generate significant demand for Ether, given that spot Ether ETFs have shown resilience despite a substantial market downturn in October. U.S. spot Ether ETFs have only sold about 18% of their flows from a peak of $15 billion, despite Ether's poor price performance following a $19 billion market correction, according to James Seyffart, a crypto and ETF analyst at Bloomberg. Seyffart noted in a Monday post that these ETFs have experienced approximately $2.8 billion in outflows since their peak. Large cryptocurrency investors, known as whales, have been increasing their spot Ether holdings despite widespread selling by top traders, referred to as "smart money" traders by Nansen. Whales acquired a total of $4.83 million in spot Ether tokens across 32 wallets over the past week, while smart money traders sold $8.9 million across 63 wallets during the same period, according to data from crypto intelligence platform Nansen. Additionally, new cryptocurrency wallets created in the last 14 days have added $2.34 billion worth of spot Ether tokens, indicating a significant rise in demand from new market entrants.