Former SEC official proclaims Morgan Stanley’s Bitcoin ETF initiative to be a “death wish”

John Reed Stark, a former official of the United States Securities and Exchange Commission, is of the opinion that Morgan Stanley’s Bitcoin ETF proposal could significantly burden its compliance department.

John Reed Stark, a former Securities and Exchange Commission (SEC) official and crypto skeptic, cautions that Morgan Stanley, the largest wealth manager in the United States, may be subject to rigorous compliance scrutiny as a result of allowing its entire team of financial advisors to begin pitching Bitcoin exchange-traded funds (ETFs).

Stark wrote in an Aug. 9 X statement, “Morgan Stanley has just voluntarily subjected itself to what will likely become the largest SEC and FINRA examination sweep in history by unleashing its legion of 15,000 brokers to market Bitcoin.”

Stark clarified that the SEC and FINRA compliance and enforcement staff will have immediate access to all records, documents, emails, texts, voicemails, and phone conversations related to Morgan Stanley’s Bitcoin sales to retail investors.

“The SEC and FINRA will have full access to this magnificent, plentiful, and readily available cache of evidence whenever they need it, whether it’s via an online request for papers or testimony or an unexpected “for-cause” inspection that takes place on-site.” Added by Stark.

On August 7, a source familiar with the matter informed Cointelegraph that Morgan Stanley had authorized its 15,000 financial advisers to begin recommending Bitcoin exchange-traded funds (ETFs) to high-net-worth clients. This prompted the criticism.

The individual, who was prohibited from publicly discussing the matter, verified a previous report on CNBC that Morgan Stanley intends to begin recommending Bitcoin ETFs.

At present, the organization is exclusively endorsing two products: Fidelity’s Wise Origin Bitcoin Fund (FBTC) and BlackRock’s iShares Bitcoin Trust (IBIT). Commentators in the crypto industry anticipate that it will have a substantial impact on Bitcoin.

Crypto venture fund Dragonfly managing partner Haseeb Qureshi stated on X, “Expect to see some chunkier inflows in the second half of the year.”

“Can you fathom the magnitude of this?” Added by the DeFi investor. According to Farside data, spot Bitcoin ETFs have garnered $17.3 billion in inflows since their approval on Jan. 11.

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