Morgan Stanley has officially entered the US spot crypto ETF market, launching two new products on the NYSE Arca, tracking Ethereum and Solana respectively. Both funds have an annual expense ratio of 0.14%, lower than current comparable Ethereum and Solana ETFs in the US, and also incorporate a staking reward distribution design.
Ally Wallace, Global Head of ETFs at Morgan Stanley Investment Management, stated that the goal of these two products is to simultaneously provide asset price exposure and collateralized income. For traditional asset management firms, this means that competition in the spot crypto ETF market has expanded from simple fee competition to the design of return structures.
The rate has been reduced to 0.14%.
Regarding Ethereum ETFs, the previous lowest-fee product was Grayscale's Mini Ethereum Trust, with an annual fee of 0.15%. For Solana ETFs, Franklin Templeton's SOEZ had a fee of 0.19%. Based on currently available data, Morgan Stanley's pricing is lower than both of these products.
Bloomberg ETF analyst Eric Balchunas also calls it one of the cheapest Ethereum and Solana ETFs currently available in the US market. Low fees typically help attract larger-scale long-term allocation funds, especially after the number of similar products has increased.
The two funds have different pledge ratios.
Both funds retain staking functionality, but the specific arrangements differ. MSSE allows 50% to 80% of Ethereum holdings to be staked, provided there are no legal or tax obstacles. The fund remains defined as a passive product, not engaging in active trading or using leverage or derivatives.
In contrast, MSOL has a higher collateralization limit, allowing up to 100% of Solana holdings to be pledged. This means the product has greater exposure to collateral yields. Morgan Stanley states that collateral yields earned by the ETF are not retained by the management but remain within the fund structure.
- MSSE: Allows staking of 50% to 80% of ETH holdings.
- MSOL: Up to 100% of your SOL holdings can be staked.
- Both funds have an annual expense ratio of 0.14%.
The custody and tax conditions have been specified.
The staking infrastructure is provided by Figment, Galaxy, and Coinbase Canada, with a service fee capped at 5%. Ethereum asset custody is handled by Bank of New York Mellon and Coinbase Custody Trust Company. Both ETFs track the CoinDesk settlement benchmark at 4 PM New York time.
Both products are also subject to Revenue Procedure 2025-31. Under this arrangement, ETFs employing a proof-of-equity mechanism can avoid additional tax treatment issues when distributing pledged proceeds, provided that custody, pledging, and information disclosure requirements are met. This provides a clearer operational basis for spot ETFs with pledging capabilities.
This offering continues Morgan Stanley's digital asset strategy following the launch of its Bitcoin Trust earlier this year. The company previously disclosed that the Morgan Stanley Bitcoin Trust saw $34 million in trading volume on its first day, and its assets under management exceeded $381 million as of July 16. Wallace stated that MSIM currently manages 22 ETFs and ETPs with assets exceeding $14 billion, including three digital asset ETPs.
