Morgan Stanley Launches Two More Crypto ETFs, 0.14% Fee Undercuts the Market
- Core Thesis: Morgan Stanley's Ethereum and Solana exchange-traded products (MSSE/MSOL) recorded a combined $38 million in trading volume on their first day. Leveraging their ultra-low fees (inclusive of staking costs) and extensive wealth advisor network, they are formally entering the crypto fund market dominated by players like BlackRock and Grayscale. However, they face significant barriers to entry posed by the scale and liquidity of incumbent products.
- Key Elements:
- MSSE saw net inflows of $5.15 million on day one, accounting for over one-third of the total $14.5 million inflow into all U.S. Ethereum funds that day. MSOL saw approximately $19 million in trading volume but no new net inflows, while Solana-based funds overall experienced net outflows of $18.1 million.
- The price war strategy is clear: MSSE and MSOL charge a management fee of only 0.14% and take no cut of staking rewards. Custodians and staking service providers collectively take a mere 5%, making the fee structure entirely lower than competitors (e.g., Grayscale's GSOL charges a 0.19% management fee plus a 7% staking fee).
- The products support staking of underlying assets: MSSE targets a staking ratio of 50%-80% (capped at 80%), while MSOL can stake up to 100%. Net staking yields are distributed monthly in cash, allowing traditional investors to generate returns without having to manage crypto assets themselves.
- Significant distribution advantage: Morgan Stanley boasts nearly 16,000 financial advisors, manages $7.4 trillion in client assets, and covers over 20 million clients. Through platforms like E*TRADE, it can reach non-crypto-native investors.
- High barriers from first-mover products: Bitwise's BSOL has accumulated net inflows of $892 million. BlackRock's ETHB, which includes staking functionality, has seen cumulative inflows of $529 million, while its spot ETH ETF (ETHA) has attracted $11.4 billion. New funds will require time to build scale and liquidity to catch up.
Original Author: Oluwapelumi Adejumo
Original Translation: Saoirse, Foresight News
Morgan Stanley's newly issued Ethereum and Solana exchange-traded products generated a combined trading volume of $38 million on their first day of listing. The Wall Street veteran has quickly established a foothold in two major cryptocurrency fund tracks that were previously dominated by early entrants.
Morgan Stanley Ethereum Trust (MSSE) saw 933,715 shares traded on Tuesday, attracting net inflows of $5.15 million; Morgan Stanley Solana Trust (MSOL) saw 951,216 shares traded, with a turnover of approximately $19 million, but no new circulating shares were created. Both products are listed on the NYSE Arca exchange, opening at around $20 per share.
According to data from market data provider SoSoValue, total inflows into Ethereum-related funds in the US on that day were approximately $14.5 million, with MSSE accounting for over one-third of that. BlackRock's ETHB fund with a staking feature attracted $5.9 million, while BlackRock's larger spot Ethereum fund, ETHA, saw an additional $3.5 million in new capital.
Morgan Stanley Ethereum Trust First-Day Performance (Source: SoSoValue)
The situation in the Solana track was starkly different. Investors heavily redeemed from Bitwise's BSOL fund, leading to overall net outflows of $18.1 million from major Solana funds.
The contrasting debut performance of the two products serves as an early test: how much market share can the latecomer Morgan Stanley capture? While most of MSSE's secondary market trading translated into new assets under management, MSOL saw similar secondary market trading activity but failed to attract new capital amidst broad capital outflows from the entire Solana fund category.
Morgan Stanley Investment Management launched these two products on July 28, extending its crypto product line. The institution had already launched the Morgan Stanley Bitcoin Trust (MSBT) in April this year. Although the Bitcoin ETF track was already led by early movers like BlackRock and Fidelity, MSBT's assets under management exceeded $400 million as of the time of writing.
These two new products are not limited to simple spot crypto asset allocation; both support staking of underlying assets. As competition among major fund issuers intensifies over how much staking yield can be distributed to investors, Morgan Stanley has formally entered this game.
Pricing Lower Than Competitors Across the Board, Morgan Stanley Starts a Price War
In both the Ethereum and Solana tracks, Morgan Stanley's comprehensive cost of management fees plus staking commission is at the low end of the industry, allowing it to compete for market share.
MSSE and MSOL charge an annual product management fee of 0.14%; Morgan Stanley itself takes no share of any staking rewards. The custodian and staking service provider collectively take only 5% of the total staking rewards. Before deducting various fees and dividends, the remaining income is retained in the trust account. This fee structure provides a significant advantage over established competitors.
Solana ETF Industry Fee Comparison
Bitwise's BSOL has a management fee of 0.20%, with the service provider taking a 6% share of staking rewards; Grayscale's GSOL charges 0.19% in management fees, with a 7% service provider fee; Franklin Templeton's SOEZ has an 8% staking yield commission; 21Shares' staking commission is at least 10%, Fidelity's is 15%, and VanEck and Farside Investors charge as high as 25%.
Management Fees and Staking Fees for Solana Exchange-Traded Funds (Source: Farside Investors)
Ethereum ETF Industry Fee Comparison
Industry fee differences are equally pronounced: Grayscale's low-cost Ethereum product has a management fee of 0.15% and a staking commission of 6%; BlackRock's ETHB charges a standard management fee of 0.25% and a staking commission of 10%; 21Shares' TETH has a staking commission of 25%, while Grayscale's larger Ethereum Trust, ETHE, charges a 23% staking commission.
Custodian Fees and Staking Fees for Ethereum ETFs (Source: Farside Investors)
BlackRock has launched a limited-time promotion: for the first $2.5 billion in assets under management, the management fee is reduced to 0.12% for 12 months starting in March. While the short-term management fee appears lower than Morgan Stanley's, the product's standard fee remains at 0.25%.
Therefore, Morgan Stanley's competition extends well beyond a simple comparison of standard ETF management fees. For crypto funds that support staking, the final return for investors depends on two key factors: what proportion of the fund's assets are staked on the network, and how much of the staking rewards are retained by various intermediaries.
MSSE Rules: Under normal market conditions, 50% to 80% of the Ethereum holdings are used for staking, with the prospectus setting the cap at 80%. The staking ratio can be flexibly adjusted based on redemption demand, on-chain unlocking periods, and market liquidity. MSOL's staking strategy is more aggressive: the trust can stake up to 100% of its Solana tokens; to handle daily redemptions and ensure liquidity, some tokens are reserved and not staked.
The net staking income from both funds is distributed monthly in cash, with a minimum guarantee of quarterly distributions. Income is first accumulated in Ethereum or Solana tokens, after which the trust sells the equivalent cryptocurrency for cash and distributes it to fund holders.
This model allows ordinary investors to earn staking income through traditional brokerage accounts, without needing to custody crypto tokens themselves or directly interface with blockchain validator nodes.
Distribution Channels Test the First-Mover Advantage of Established Products
Even with its fee advantage, Morgan Stanley still needs to catch up to the scale and liquidity that established funds have accumulated over months or years. The gap remains significant. Bitwise BSOL has cumulative net inflows of $892 million; Farside's data shows total assets in all Solana ETFs at $1.12 billion, with BSOL contributing the vast majority. BlackRock's spot Ethereum fund, ETHA, has attracted $11.4 billion cumulatively, while its staking-enabled ETHB has also amassed $529 million.
Established funds have longer trading histories and loyal investor bases, advantages that fee advantages cannot immediately erase. However, Morgan Stanley possesses a unique distribution channel barrier.
Bloomberg Intelligence analyst Eric Balchunas commented that, leveraging Morgan Stanley's size and reach, these two new products are the most important new supply for the Ethereum and Solana ETF tracks since their inception. The company has nearly 16,000 financial advisors, managing a combined $2.6 trillion in client assets; by the end of 2025, Morgan Stanley Wealth Management's total client assets reached a staggering $7.4 trillion, covering over 20 million clients.
Morgan Stanley has clearly identified cryptocurrencies and asset tokenization as key growth areas, facilitating clients' ability to allocate to crypto products seamlessly across the E*TRADE securities platform, corporate employee stock plans, and financial advisor channels. Supporting infrastructure is continuously being built: E*TRADE fully launched spot trading for Bitcoin, Ethereum, and Solana this month; Morgan Stanley has also partnered with Galaxy Digital, allowing qualified high-net-worth clients to exchange their crypto holdings for spot crypto ETF shares.
Leveraging this extensive offline wealth management network, MSSE and MSOL can reach ordinary wealth management clients, not just native crypto investors deeply entrenched in the crypto space — a group that comprised the vast majority of early customers for most competitors.
