Morgan Stanley Expands Crypto Push With Ethereum ETF Application

The Form S-1 registration statement, submitted Tuesday, Jan. 6, outlines plans for the Morgan Stanley Ethereum Trust, a grantor trust designed to track ether’s price while staking a portion of its holdings to generate yield. The filing follows the bank’s recent applications for bitcoin and solana ETFs, which Bitcoin.com News reported on Tuesday.

At roughly $1.6 trillion in assets under management (AUM), Morgan Stanley is among the largest traditional financial (TradFi) institutions pushing deeper into crypto-backed investment vehicles. The proposed ETF would allow investors to gain exposure to ethereum ( ETH) without managing wallets, custody arrangements, or blockchain transactions directly.

The trust would be sponsored by Morgan Stanley Investment Management Inc. and structured as a Delaware statutory trust formed on Dec. 16, 2025. It would operate without employees or directors, placing all authority in the hands of the sponsor — a familiar structure in crypto-linked ETFs.

Under the filing, the trust’s sole asset would be ether, held by regulated custodians using cold storage, with limited hot-wallet exposure for liquidity. Shares would be created and redeemed in baskets by authorized participants, either in-kind using ether or in cash through prime brokers.

Daily valuation would be calculated at 4 p.m. ET using pricing data from major ether trading platforms, with an intraday indicative value published every 15 seconds during market hours.

The standout feature is staking. The trust plans to stake a portion of its ether through third-party providers, earning rewards from Ethereum’s proof-of-stake ( PoS) network. Those rewards would generally be restaked, though quarterly cash distributions could occur if required by tax guidance. The sponsor would retain a portion of staking rewards to cover related fees.

Also read: Barclays Invests in Ubyx to Advance Stablecoin and Tokenized Deposit Infrastructure

The filing does not downplay risks. It flags price volatility, technical issues on the Ethereum network, custody vulnerabilities, regulatory shifts — including the possibility ether could be classified as a security — and tax complexity tied to staking income.

From a tax perspective, the trust would be treated as a grantor trust, meaning shareholders would be taxed as if they directly owned a share of the ether. Staking rewards would count as ordinary income, even if not immediately distributed.

If approved, the ETF would join a growing lineup of ethereum-linked investment products competing for institutional and retail capital. For now, the application adds another data point to Wall Street’s steady advance into crypto infrastructure — this time with yield baked in.

FAQ ❓

• What did Morgan Stanley file with the SEC?
  The bank filed a Form S-1 to launch the Morgan Stanley Ethereum Trust ETF.
• Will the ETF include staking rewards?
  Yes, the trust plans to stake a portion of its ether holdings to earn rewards.
• Does the ETF hold ether directly?
  Yes, the trust would hold ether in custody rather than using derivatives.
• Has the ETF been approved?
  No, the filing is pending review by the U.S. Securities and Exchange Commission (SEC).

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