Morgan Stanley disclosed that it holds $272.1 million worth of Bitcoin ETFs (exchange-traded funds), highlighting the financial institution’s increasing stake in the pioneer crypto.

This investment draws attention to the broader trend of major financial players exploring digital assets as part of their portfolio diversification strategies.

Morgan Stanley Holds $272.1 Million Worth Bitcoin ETF

The American multinational investment bank and financial services company’s investment reflects the growing interest of institutional investors in cryptocurrency. This revelation came through a regulatory filing submitted to the US Securities and Exchange Commission (SEC).

The $272.1 million stake is a substantial figure even for a company with $1.2 trillion in assets under management (AUM). This investment represents only about 0.02% of the company’s overall portfolio. Nevertheless, it is notable as part of a wider trend of institutional adoption of Bitcoin and other digital assets.

The filing comes amid a broader move by top-tier financial firms. As BeInCrypto reported, Goldman Sachs and DRW Capital disclosed $600 million in combined spot Bitcoin and Ethereum ETF holdings. The report specified that Goldman Sachs holds $410 million in Bitcoin ETFs, with major investments in BlackRock’s IBIT and Fidelity’s FBTC.

 Taken together, these investments indicate that traditional financial (TradFi) institutions are increasingly comfortable with crypto. It signals that Bitcoin ETFs, in particular, are becoming a critical component of their long-term investment strategies.

Read more: What Is a Bitcoin ETF?

The growing interest in Bitcoin (BTC) among institutional investors is a strong indicator of its increasing acceptance as a legitimate asset class. Bitcoin ETFs offer a regulated and relatively low-risk way for institutions to gain exposure to Bitcoin without directly purchasing the underlying asset.

By investing in Bitcoin ETFs, companies like Morgan Stanley participate in the expanding cryptocurrency ecosystem while managing risk in a more familiar regulatory framework.

Morgan Stanley’s move into Bitcoin ETFs is not its first foray into digital assets after an initial application in 2021. The investment bank has also steadily increased its involvement in cryptocurrency-related products over the past few years.

Earlier in 2024, Morgan Stanley became one of the largest holders of Grayscale Bitcoin Trust (GBTC), a prominent Bitcoin investment vehicle. Its holdings in GBTC suggest a broader strategy to capitalize on the growing institutional demand for crypto assets.

Impact of Bitcoin ETF Adoption on the BTC Market

Morgan Stanley’s investment in Bitcoin ETFs, alongside that of other TradFi players in the space, could have a profound influence. Even a modest allocation of capital from large institutions into Bitcoin-related products has the potential to drive up demand, which could push the BTC price higher.

“If crypto demand rises and Bitcoin gains more acceptance, a 1% allocation by Morgan Stanley could significantly boost the market. Institutional adoption often starts small, but growth will depend on market trends, regulatory clarity, and investor interest. If Bitcoin proves to be a resilient asset and solid portfolio diversifier, scaling up could happen faster than expected,” wrote MAG212 in an X post.

Meanwhile, Bitcoin’s value has risen 12.2% over the last seven days, bringing its price to $67,771 as of writing. With growing institutional interest in Bitcoin ETFs and significant inflows into these funds, the pioneer crypto could see further gains.

On October 14, for example, the Bitcoin ETF market recorded its highest daily inflow of $555.86 million since June 4. This highlights the increasing demand from investors.

As of October 17, the total net assets of spot Bitcoin ETFs were $64.06 billion. This includes major players like BlackRock’s iShares Bitcoin Trust (IBIT), Grayscale’s Bitcoin Trust (GBTC), and Fidelity’s Bitcoin ETF (FBTC). The growing adoption of these funds by financial institutions is a key development in the integration of Bitcoin into TradFi.

Read more: How To Trade a Bitcoin ETF: A Step-by-Step Approach.

Meanwhile, as more institutions like Morgan Stanley invest in Bitcoin ETFs, the line between TradFi and cryptocurrency continues to blur. The trend suggests that Bitcoin and other digital assets may become more mainstream.

This is as institutional investors seek new avenues for growth and diversification in an increasingly complex financial environment.

Italy is considering a dramatic raise to its capital gains tax on Bitcoin (BTC) and other cryptocurrencies from 26% to 42%. The move could place it among the countries with the highest crypto taxation rates in Europe.

This decision, part of Italy’s 2025 budget plan, aims to address fiscal shortfalls by leveraging the fast-growing digital asset market.

Italy Risks Crypto Flight With 42% Bitcoin Capital Gains Tax

Italy’s Deputy Economy Minister Maurizio Leo announced the tax hike at a Wednesday conference. He said increasing the capital gains tax by 16% would bolster public services amid budgetary constraints. The government hopes that the added revenue will help address the country’s fiscal challenges, particularly funding public services and healthcare.

The plan also includes scrapping the revenue thresholds for Italy’s Digital Services Tax (DST), a measure targeting large digital platforms. Previously, the DST applied only to companies generating over €750 million (or approximately $815 million) in global revenue. However, this will no longer be the case if the proposed bill passes.

It is worth noting that Italy’s proposed 16% increase in capital gains tax contradicts what Prime Minister Giorgia Meloni recently wrote on X (formerly Twitter).

“…we [the Council of Ministers] approved the budget law, an intervention that puts citizens, families, and the relaunch of our Nation at the center. As we promised, there will be no new taxes for citizens. In addition, we will make the tax cut on workers structural, and 3.5 billion from banks and insurance companies will be allocated to Healthcare and the most vulnerable to ensure better services that are closer to everyone’s needs. With this Government, Italy looks to the future with a budget law that puts the work and well-being of Italians first,” Prime Minister Meloni shared.

Read more: How to Reduce Your Crypto Tax Liability: A Comprehensive Guide.

The prospective capital gains tax has sparked significant controversy among investors and industry leaders, with largely negative reactions. The general sentiment is that it could stifle the country’s growing financial sector, especially in crypto.

Specifically, many argue that the move could push crypto investors out of Italy, potentially leading to capital flight. This occurs when investors move funds abroad to avoid taxes or inflation, seek better returns, or prepare for possible emigration.

The same happened in India in 2022, where heavy taxes on digital assets adversely affected crypto trading volumes. The government imposed a 30% capital gains tax on profits from digital assets starting in April 2022. Additionally, losses from one asset could not be used to offset taxes on profits from other assets, further impacting traders.

At the time, some overseas platforms saw signups surge to as many as 450,000, as Indian investors sought alternatives to avoid the country’s high taxes. This created a domino effect, with many shifting to foreign platforms. Given this precedent, there are concerns that Italy could face a similar exodus of crypto activity if heavy taxation policies are enforced.

“Time to leave Italy,” Lorenzo, a popular user on X, quipped.

Therefore, the risk to the local crypto industry is considerable as the bill awaits going into the voting stage. The proposed tax hike also comes at a time when Italy’s broader financial policies are in the limelight. In 2022, Italy imposed a 26% tax on cryptocurrency profits exceeding €2,000 (or $2,172). This marked a significant shift in the country’s approach to digital assets.

Against these backdrops, the latest proposed increase could make Italy one of the least attractive European nations for cryptocurrency investors. From a global context, this capital gains tax proposal would place it in a unique position in Europe. Italy could also lose its position in the region in terms of trading volume metrics.

Read more: Complete Guide to Filing Cryptocurrency Taxes in 2024

Noteworthy, the Italian parliament will vote on the proposal later this year. If approved, this tax policy could come into effect in 2025, potentially reshaping Italy’s position in the global cryptocurrency market.

Tether’s CEO Paolo Ardoino is particularly vocal about Italy’s proposed bill, condemning the measure as detrimental to innovation. Ardoino criticized Italy’s plan, suggesting that it would hinder the country’s ability to attract new technological ventures.

“How dare the subjects use the Bitcoin as protection/optionality towards Italian financial policies,” Ardoino noted.

Matt Hougan, Bitwise’s Chief Investment Officer, has forecast a significant price surge for Bitcoin and Ethereum in 2025.

During a YouTube interview, he outlined the reasons behind this bold prediction.

3 Reasons Why Bitcoin Could Reach $200,000 by 2025

Hougan shared three key factors for his bullish outlook. These stem from the US elections, large amounts of sidelined capital, and the long-term impact of Bitcoin ETFs. On the political front, Hougan argued that either a pro-crypto President, Donald Trump, or a neutral President, Kamala Harris, could have a positive—or at least non-negative—impact on Bitcoin.

Read more: Bitcoin (BTC) Price Prediction 2024/2025/2030

At the time of writing, Trump’s chances of becoming president reached 58.9%. Bitcoin prices have also surpassed $67,000, as investors believe that Trump will introduce policies that could drive significant market growth.

Moreover, Hougan revealed that many major investors have yet to enter the market. They are waiting for more political and regulatory clarity. However, if Bitcoin continues its upward trajectory, these investors may feel compelled to jump in sooner rather than later.

“The election represent uncertainty, and so investors are sitting on the sidelines, waiting. They realized that crypto is not going away. They realized that it’s moving into the institutional sort of part of the world, but they thought they could wait and delay. I think if this rally continues, if [Bitcoin] trips up towards $70,000, then, it becomes a self-fulfilling prophecy. People would realize they have to get on the train.” Hougan said.

Additionally, Hougan also emphasized the long-term potential of Bitcoin ETFs. As a former CEO of ETF.com, he believes the $20 billion inflow in the first year of Bitcoin ETFs represents a major success. Similar to gold ETFs, Bitcoin ETFs are still in their early stages.

The latest data shows that, despite being in existence for less than a year, Bitcoin ETFs’ Assets Under Management (AUM) are already over 52% of that of Gold ETFs.

“Before I came to Bitwise six and a half years ago, I was the CEO of etf.com, so this is my neck of the woods. The thing that crypto should realize about ETFs is that they are multi-year stories. If you look back at the Gold ETF, which launched the most successful ETF launch of all time…I think the same thing is going to happen for Bitcoin ETFs. We’re still really at the earliest stage.” Hougan said.

When asked about his Bitcoin price forecast, Hougan predicted that BTC would reach a new all-time high by the end of the year. Moreover, he affirmed that Bitcoin could hit $200,000 in 2025.

Read more: How To Trade a Bitcoin ETF: A Step-by-Step Approach

Hougan is also optimistic about Ethereum. He says that while it is currently undervalued due to the rise of competing blockchains, it remains the top platform for DeFi applications, stablecoins, and tokenization. With regulatory and technological advancements, Ethereum could also set a new record high by 2025.