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Morgan Stanley is preparing to launch a spot Bitcoin exchange-traded fund priced at just 0.14%, undercutting existing low-cost rivals and potentially triggering a new fee war in the sector, according to a recent regulatory filing.

The proposed fee, equivalent to 14 basis points, would be lower than current market leaders such as

Grayscale’s Bitcoin Mini Trust at 0.15% and

BlackRock’s iShares Bitcoin Trust at 0.25%,

making it the cheapest spot Bitcoin ETF if approved.

The filing, submitted to the U.S. Securities and Exchange Commission, signals Morgan Stanley’s shift from distributing crypto products to issuing its own, leveraging its vast wealth management network to capture market share.

Morgan Stanley oversees trillions in client asets with one of the largest adviser networks in the wealth management industry. A small allocation from its wealth management arm is thus quite significant and entering the market at the lowest fee positions Morgan Stanley for quick uptake and growing the market share.

BITCOIN | Institutions Now Hold ~12% of the Total Bitcoin Supply – a 5% Increase in Just One Year

Because spot Bitcoin ETFs offer near-identical exposure to the asset, cost remains one of the few differentiators. Analysts say even a small fee advantage can drive capital flows, as investors and advisors can switch between funds with minimal friction.

Cost and access often supersedes structure in determining which funds gain market share.

Lower-cost products have tended to attract inflows before while higher-fee funds have seen assets departure with the GrayScale Bitcoin Trust (GBTC) being a classic example. The ETF now holds ~$10 billion in assets compared to ~$29 billion at launch in January 2024.

Bitcoin becoming mainstream:https://t.co/cshTV8jpvG

— Market Cap Trainers (@NSE_Investors) January 11, 2024

If approved, the move could intensify competition among issuers and accelerate a broader trend of declining fees across the rapidly growing Bitcoin ETF market.

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