Morgan Stanley: Spot bitcoin ETF approvals are a 'potential paradigm shift' in global view of crypto

Quick Take

  • In a note to investors, Morgan Stanley’s head of digital asset markets said spot bitcoin ETF approvals mark a significant point in the adoption of bitcoin by the global financial system. 

Fifteen years ago, Bitcoin was an idea on an internet forum. Now, as stablecoin volumes rival payment networks like PayPal and Visa, bitcoin's adoption by Wall Street in the form of spot Bitcoin ETFs may mark a "potential paradigm shift in the global perception and use of digital assets," said Andrew Peel, head of digital asset markets for investment bank Morgan Stanley. 

In a note to investors, Peel gave an overview of the current threats against the U.S. dollar's current reign as the world's reserve currency, as 60% of global foreign exchange reserve balances are held in dollars. In comparison, China's yuan, despite the country's recent efforts to boost its foreign trade, makes up only 2.5% of those balances. 

However, several "de-dollarization" threats may erode the greenback's place on top, Peel wrote, including Bitcoin's "remarkable" adoption worldwide, noting that 100 million people worldwide hold the cryptocurrency (there are Bitcoin ATMs in 82 countries, Peel claims) along with major companies like Tesla and a sovereign nation, El Salvador.

Stablecoins, however, may prove to be crypto's "killer app," according to Peel, who notes that stablecoin trading volume has rivaled traditional digital clearinghouses like Visa and PayPal in recent years. Both Visa and PayPal have made steps towards adopting stablecoins themselves, with Visa's integration of USDC on Solana and PayPal's PYUSD stablecoin. 

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