Morgan Stanley Launches Two More Crypto ETFs, Undercutting the Market with 0.14% Fee
- Core View: Morgan Stanley's Ethereum and Solana exchange-traded products (MSSE/MSOL) recorded a combined $38 million in trading volume on their first day. Leveraging ultra-low fees (including staking costs) and a vast network of financial advisors, they have officially entered the crypto fund market dominated by players like BlackRock and Grayscale. However, they face significant barriers due to the scale and liquidity of first-mover products.
- Key Elements:
- MSSE saw net inflows of $5.15 million on its first day, accounting for over one-third of the total $14.5 million inflow into all US Ethereum funds that day. MSOL saw about $19 million in trading volume but no new net inflows, with Solana-based funds overall experiencing net outflows of $18.1 million.
- A clear price war strategy: MSSE and MSOL charge a management fee of only 0.14% and take no cut of staking rewards. The combined fees for custody and staking services are only 5%, making the overall fee structure lower than competitors (e.g., Grayscale's GSOL charges a 0.19% management fee plus a 7% staking revenue share).
- The products support staking of underlying assets: MSSE has a staking ratio of 50%-80% (up to 80%), while MSOL can stake up to 100%. Net staking yields are distributed to investors in cash monthly, allowing traditional investors to generate returns without managing crypto assets directly.
- Significant channel advantage: Morgan Stanley boasts nearly 16,000 financial advisors, manages $7.4 trillion in client assets, and serves over 20 million clients. It can reach non-crypto-native investors through platforms like E*TRADE.
- Formidable first-mover barriers: Bitwise's BSOL has accumulated net inflows of $892 million, BlackRock's ETHB (which includes staking functionality) has attracted $529 million in inflows, and its spot ETH ETF (ETHA) has brought in $11.4 billion. New funds need time to build comparable scale and liquidity.
Original Author: Oluwapelumi Adejumo
Original Translation: Saoirse, Foresight News
Morgan Stanley's newly issued exchange-traded products for Ethereum and Solana saw a combined trading volume of $38 million on their first day of listing. With this, the Wall Street veteran quickly established a foothold in two major cryptocurrency fund tracks that had long been dominated by early entrants.
The Morgan Stanley Ethereum Trust (MSSE) saw 933,715 shares traded on Tuesday, attracting net inflows of $5.15 million. The Morgan Stanley Solana Trust (MSOL) traded 951,216 shares, with a trading volume of approximately $19 million, but did not generate any new circulating shares. Both products are listed on the NYSE Arca exchange, with an opening price of around $20 per share.
According to data from market data provider SoSoValue, total inflows into Ethereum-related funds across the US on that day were approximately $14.5 million, with MSSE accounting for over one-third of that inflow. BlackRock's staking-enabled ETHB saw inflows of $5.9 million, while BlackRock's larger spot Ethereum fund, ETHA, received an additional $3.5 million.
Morgan Stanley Ethereum Fund First Day Performance (Data Source: SoSoValue)
The situation in the Solana track was starkly different. Investors heavily redeemed Bitwise's BSOL fund, leading to overall net outflows of $18.1 million from mainstream Solana funds.
The contrasting debut performance of the two products served as an early test of how much market share Morgan Stanley, a latecomer, could capture. Most secondary market trading in MSSE ultimately converted into new assets under management. In contrast, within an environment where Solana funds across the board generally saw capital reductions, MSOL, despite having considerable secondary market trading activity, failed to attract new capital.
Morgan Stanley Investment Management launched these two products on July 28, extending its cryptocurrency product line. The firm had already launched the Morgan Stanley Bitcoin Trust (MSBT) in April this year. Although the Bitcoin ETF track was already led by BlackRock and Fidelity, MSBT's assets under management had surpassed $400 million by the time of this report.
These two new products are not limited to simple spot crypto asset allocation; both support staking of the underlying assets. As fund issuers increasingly compete over how much staking yield they can distribute to investors, Morgan Stanley has officially entered this competition.
Fees Significantly Lower Than Competitors, Morgan Stanley Starts a Price War
In both the Ethereum and Solana tracks, Morgan Stanley's combined cost of management fees plus staking commissions is at the low end of the industry, using this to compete in the market.
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 together take only 5% of the total staking rewards. Before deducting various fees and distributions, the remaining rewards are all retained in the trust account. This fee structure provides a significant advantage over many established competitors.
Solana ETF Industry Fee Comparison
Bitwise's BSOL charges a 0.20% management fee, with the service provider taking a 6% cut of staking rewards. Grayscale's GSOL has a 0.19% management fee, with a 7% service provider cut. Franklin Templeton's SOEZ takes an 8% share of staking rewards. The minimum staking commission for 21Shares is 10%, Fidelity is 15%, and VanEck and Farside Investors go 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 apparent: Grayscale's low-cost Ethereum product has a 0.15% management fee and a 6% staking commission. BlackRock's ETHB has a standard 0.25% management fee and a 10% staking commission. 21Shares' TETH has a 25% staking commission, while Grayscale's large-cap Ethereum Trust, ETHE, has a 23% staking commission.
Custody and Staking Fees for Ethereum ETFs (Source: Farside Investors)
BlackRock has introduced a limited-time offer: for 12 months starting in March, the management fee for the first $2.5 billion in assets under management is reduced to 0.12%. While this short-term management fee is superficially lower than Morgan Stanley's, the product's standard rate remains 0.25%.
Therefore, Morgan Stanley's competition goes beyond just standard ETF management fee comparisons. For crypto funds that support staking, the final net yield for investors also 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 withheld by various intermediaries.
MSSE Rules: Under normal market conditions, 50% to 80% of Ethereum holdings are staked, with the prospectus setting 80% as the staking cap. The staking ratio can be flexibly adjusted based on redemption demand, on-chain unlocking times, and market liquidity. MSOL's staking strategy is more aggressive: the trust can stake up to 100% of its Solana tokens. To meet daily redemptions and ensure liquidity, a portion of tokens will be reserved and not staked.
The net staking income from both funds is distributed monthly in cash, with a minimum guarantee of quarterly dividends. Rewards are first accumulated in Ethereum or Solana tokens, after which the trust sells equivalent amounts of cryptocurrency for cash to distribute to fund holders.
This model allows ordinary investors to earn staking yields through traditional brokerage accounts without needing to custody crypto tokens themselves or directly interface with blockchain validators.
Distribution Channels Test the First-Mover Advantage of Established Products
Despite its fee advantage, Morgan Stanley still needs to catch up to the scale and liquidity that established funds have accumulated over months or even years. The gap remains significant. Bitwise's BSOL has cumulative net inflows of $892 million. Farside estimates total assets for all Solana ETFs at $1.12 billion, with BSOL contributing the vast majority. BlackRock's spot Ethereum fund, ETHA, has attracted a cumulative $11.4 billion, while its staking-enabled fund, ETHB, has also accumulated $529 million.
Established funds have longer trading histories and solid investor bases, advantages that cannot be immediately erased by a fee advantage alone. However, Morgan Stanley possesses its own unique distribution channel moat.
Bloomberg Intelligence analyst Eric Balchunas commented that, leveraging Morgan Stanley's size and reach, these two new products are the most significant new supply in the Ethereum and Solana ETF space since their inception. The firm 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 were as high as $7.4 trillion, covering over 20 million clients.
Morgan Stanley has explicitly identified cryptocurrency and asset tokenization as key growth areas, making it convenient for clients to allocate to crypto products across the E*TRADE securities platform, corporate employee financial plans, and through financial advisors. Supporting infrastructure is continuously being built out: E*TRADE this month fully launched spot trading for Bitcoin, Ethereum, and Solana. Morgan Stanley has also partnered with Galaxy Digital, allowing eligible high-net-worth clients to convert their crypto holdings into spot crypto ETF shares.
Leveraging this vast offline wealth management network, MSSE and MSOL can reach ordinary wealth management clients, not just native crypto investors deeply embedded in the crypto ecosystem – the majority of competitors' early customers were limited to crypto enthusiasts.
