Morgan Stanley Launches Cheapest Ether and Solana ETFs at 14 Basis Points

**SPEAKER_1** (0:00)
Morgan Stanley just launched their Ether and Solana ETFs. I'm here on the New York Stock Exchange with Morgan Stanley Investment Management's Global Head of ETFs, Ally Wallace. Hello.

**Ally Wallace** (0:10)
Hi, thank you for having me.

**SPEAKER_1** (0:11)
Thanks for being here. Congratulations on the launches.

**Ally Wallace** (0:14)
Thank you, we're really excited about it.

**SPEAKER_1** (0:16)
I'm sure you are. Now, these two products are launching into a little bit of a subdued market. I know you can't always plan for this. It takes a long time to bring these products to market, but just talk to me a little bit about the environment you're launching into and how the investors and clients you're talking to are looking at these two products.

**Ally Wallace** (0:31)
Yeah, I mean, we really see the broad opportunity long term. So ETFs are literally only about 5% of the overall crypto market. And we think that there's obviously we're in a lull right now just from the overall, you know, we've had some drawdowns in the past couple of months, but we really feel that that long term that there's such value in the underlying technology that we want to bring these products to market regardless of where the market stands.
So we've really seen a lot of interests from all different types of clients. We did launch our Bitcoin product in April and have seen across institutional, retail, intermediary, a really broad interest and have had about $400 million into that product when most ETFs had experienced a significant drawdown.

**SPEAKER_1** (1:16)
That Bitcoin ETF was the most successful launch for Morgan Stanley ever. It came in at 14 basis points, the cheapest on the market. The Solana ETFs are also coming in at 14 basis points. It's cheapest on the market. Talk to me about how you plan on remaining competitive, right? You have the cheapest fee of the Morgan Stanley name. Your competitors have been on the market for about a year. They have hundreds of millions in assets under management. They have that established. How do you compete? Yes.

**Ally Wallace** (1:45)
So as you said, like price is one thing. We really felt like these are building block vehicles, they're passive funds, so you should not be charging very much for them. So 14 across the board for all three products. We really see our value as the first US bank owned asset manager to bring it to market. A lot of rigor went into launching these products. There's a lot of time and energy that goes into ensuring they fit the high protocol that Morgan Stanley requires for products. So we really feel we're bringing value to the market there.
Most of the entities that have ETFs in these two, especially Ether and Sol right now, are unregulated entities. So that's one of our value propositions as well as price. And we, from an overall, these are including staking, which allow for additional yield in these products. We are positioning that we are passing back all the staking rewards that are yielded from this product to investors. Outside of any custodial fees, the investors will get all the yield for the staking rewards. And that is really unique to the market right now. All the different entities are taking different percentages of staking rewards as part of their take-home fee. And we're passing back 100%.

**SPEAKER_1** (3:02)
Talk to me a little bit about the staking component for investors who are just hearing about this now. How does the economics work? What can they expect?

**Ally Wallace** (3:09)
Yes. So, historically, in these products with staking just launched in November, staking, these are both proof of stake networks. Solana and Ether. So, in that, we wanted to include staking in it from an ETF perspective to add that additional yield. You can see from an Ether perspective, historically, that's ran about 2 to 3% around like 2.8% of additional yield. And then for Solana, around 6 to 8%.
So, that is where we're positioning the products. And as I said, each issuer has structured their products for take-home fees. You know, they will take a cut of those Solana rewards or Ether rewards. And we're looking to pass back 100% of the rewards for that.

**SPEAKER_1** (3:52)
Solana and ETH, different from Bitcoin. I think investors understand Bitcoin as digital gold, a hedge against inflation. How should investors think about Solana and ETH, especially when they're looking at how to position in portfolios?

**Ally Wallace** (4:03)
Yes. I mean, first from a diversity perspective, I think really long term, ETH has proven itself to have an institutional buy-in and the underlying technology has proven that there is a long-staying capability there, especially with the additional of tokenization and staple coins. Solana really has been viewed more as a trading type cryptocurrency and has really added value for that fast trading aspect to it.