Amy, how are you this morning? Good to see you.
Good to see you, too. Okay, so this is going to be an interesting one. I have three panels I'm doing. We talked to Jeff Solomon yesterday, who was former CEO of Cowen, which was a challenger bank acquired by TD. I have Brett Ted Paul later today, who's a co-CEO of institutional Coinbase. Then I have you, who is running digital asset strategy at Morgan Stanley, which is to me a huge deal that Morgan Stanley has appointed somebody as digital assets. But why don't we just start a little bit, just tell me, tell everyone about Morgan Stanley, because I think a lot of people in the DeFi space think every single big bank is the same. What's Morgan Stanley's expertise? What do you do? And why don't we just start there?
Sure. And I think that's a great point to start because I think when you look at the G-SIBs, a lot of folks want to compare what Morgan Stanley does, what JP Morgan, what Goldman, what Citi do, and many of our business constructs are quite different. We have a considerable investment banking business, investment management business, and the largest wealth management business in the US. And with that, that's really where we need to align our digital asset interests. We don't have retail banking. We don't have to manage corresponding banking business like some of our peers do. So I think that gives you just a good construct of where our alignment and our strategy is really going to fit when we look at the digital asset space.
Great. And you sort of just, you know, sort of yada yada yada through it, but you have $8 trillion of assets under management through wealth management, which means you're managing actively for the most part $8 trillion of other people's assets. Is that right?
The next largest platform is 30% smaller than we are.
Yeah. So, this is a big deal. These like if there's somebody who can help orange pill the world, it would be Morgan Stanley.
That would probably be accurate.
And that would not, that's not your job to...
And I think the one thing also to highlight there, we do have our E*TRADE business. I'm always surprised sometimes when I run into folks that don't know that we own E*TRADE and that they're not now part of the Morgan Stanley brand. But I think we have an entire spectrum of wealth management from basically self-directed to your mainstream wealth management to your high net worth and family office business. So we really have the whole spectrum covered within that wealth management space.
Yeah. So great. So there's also Morgan Stanley probably has the longest term history as a banker of then MicroStrategy for everyone's perspective. When we were just a software company, which we still are, in addition to our Bitcoin, Morgan Stanley was our lead technology banker. We used to, ironically enough, buy back stock with our excess cash. Morgan Stanley led that. When we transitioned to our Bitcoin strategy and we did our very first Dutch tender auction, Morgan Stanley led that. And most recently, the largest IPO at that time last year was Stretch. Morgan Stanley led that. And what was unique about that? One, it was a very unique instrument, a perpetual preferred with a floating dividend. And two, it was the first time it was distributed to Morgan Stanley's wealth, which was $8 trillion of AUM had access to Stretch. Tell me about how that decision came to be because I know it wasn't an easy one.
Yeah. Well, I think one of the things that we've lived through over the last number of years, and this isn't going to surprise anyone in this room, is a very different landscape in terms of a regulatory environment. So, as you could imagine, as one of the largest banks in the world, we had a fair bit of pressure on us around really navigating that regulatory environment. So there was a limitation in terms of what we could do and I think there was a risk management component to that that continued to open up last year. Right. So 2025 was an incredible year for us in the organization or many of us that have been working on these digital asset initiatives across the organization felt a lot more flexibility to take the next step and push things through a little bit farther than they were before. And I think that's really, it was perfect timing even with that Stretch offering. I think the other thing too that's really interesting about that product is just what it offers. I mean, I'll tell a little bit, you're the expert at it so I can just put my highlights in there. But most of what we've seen come to the market is just passive exposure where you have to eat all of the volatility that comes along with that. And this is the first time you started to see products roll out there where you were quite thoughtful in doing this and offering the stability, the yield. I mean, yield is a huge topic beyond just the digital asset space but just in the wealth space overall and the tax efficiency. I mean, those are just key words and you're able to put that all in a package with the underlying being that Bitcoin asset which many people feel very strongly about and it's a very interesting product to talk to clients about.
So give folks a little bit more perspective. We'll talk about Stretch a little bit more. A preferred, a hybrid if you will, has primarily been issued by banks including Morgan Stanley and other banks and we've shown, you've seen charts where the liquidity on a preferred typically trades about a million dollars a day of public preferred. Give people maybe the history of how do preferreds work before Stretch came along and what do you think the future's going to look like?
Oh, I am not the expert at that. That's going to be my team and I'm not going to go into detail on that. I'll leave that to the bankers to go into. The one thing that I would just highlight there though is I think there's a major lift on the education of how these work. I think you guys have put a lot of time into doing that, but I think there's still a lot more work to be done just in terms of really having clients understand. And I guess the other thing is how much do they really focus on that or do they really just focus on some of those high level points that I brought up before around the stability and the yields, the income component that they have on that?
So your advice is forget about the fact it's a preferred and just talk about the yield, the tax deferral, the income component, how it's stable, how it's overcollateralized.
You know, I think that's from the experience they have so many products put in front of them every single day. You really have to make it quite simple to understand. And I think that's one thing that you've done specifically with the Stretch product beyond some of the other products that you've put out there.
Okay, great. Well, we've worked with pretty much all of the banks and I can attest that Morgan Stanley is one of the more digitally forward ones. Tell me how that came to be and what is your role? What are you doing?
So, we've been working in the digital asset space for a long time. We might have not had a head of digital strategy or a digital asset team. But this goes back years ago. We were focused on blockchain technology when everyone was really focused more on the private blockchain initiatives in the mid-teens prior to COVID. And you saw this continued adoption. It's really almost at the same time you started, I remember sitting in on your first institution, Bitcoin for Institutions, when you rolled that out during COVID. I think it was all just remote at that point. And really it was at that moment that you just saw this continued discussion and exploration of institutions around spot crypto. We are rolling out on the E*TRADE platform spot crypto. We've been public about that. We're looking at wallet technology for the entire wealth management space. We've filed for a couple of crypto ETPs. So we will be offering those to clients in the coming months. And across our entire sales and trading business, anywhere where there's an opportunity to assess a connectivity point to the digital asset space, we're exploring if that's tokenization of equities, tokenization of structured notes, some sort of opportunities within our fixed income, sorry, our FX business. There really is every area that we need to explore to see if it's a crypto opportunity.
So looking at things like Bitcoin, Ethereum, Solana and otherwise, or looking at just using that technology for some of the opportunities that you've seen as folks have talked more about tokenization and stablecoins this year. And so what's your role? Like do you have a number? They're like, Amy, you're going to run digital strategy at Morgan Stanley. You need to grow X percentage of, you need to convince $8 trillion worth of people to put 50% of that into Bitcoin. Is that, that seems like a reasonable objective.
Yeah, there we go. That's a good KPI to give my boss. I think really what we need to do and we've seen this over, we've learned over the years because we've quietly been living through a number of these cycles is as these things have popped up around the business, we've really had to stay more coordinated with building out the infrastructure to support this. This is not the same infrastructure that we're running today in terms of our legacy trading. Spot crypto, the custody that goes along with it, the data that goes along with it, the consolidation, making sure you're getting the liquidity across all the exchanges. These are all infrastructure elements that we need to build out internally to be able to offer that institutional support for the business regardless of which direction this goes. So, I'm trying to do this at the firm level and make sure we're coordinated across every division because, as you can imagine, it's very easy within an organization as large as ours to have 52 meetings with the same vendor. And you know, many of us all have friends, some of us in this room work at fintech. You don't have that much space to deal with our organization with that sort of fragmentation. So, we're really trying to get this more coordinated. The second piece of this is the client side. So we have, I mean it's really part of our entire ethos at the firm is really the client-led initiatives. And when we get into something it really is many times driven by the client demand and there is significant questions that we're getting from clients if that's allocations. We've put out a fair bit of research from some of my colleagues that are here on the allocation within the wealth management space. How much should you allocate to Bitcoin or the cryptocurrency space? But also as we see some of these other topics, how is tokenization going to disrupt my business? What do I have to think about with the introduction of stablecoins? Do I have to be ready for this? Are there businesses that are at risk that I haven't thought about yet? So, there's a significant amount of incoming and we're also trying to coordinate that.
That's great. So let's talk about some of the products that are coming up for Morgan Stanley. You'd mentioned you're going to allow folks on the E*TRADE platform to buy and sell crypto, spot crypto, which is great, and I think you're doing that through a partnership. And then I think later on at some point in time in the next year you're actually going to build out a native custody and exchange solution, which I'm pretty excited about. You'll potentially be the first major bank to offer that. Why is that piece important and what are you thinking about, like how does that strategically fit in?
Yeah, I think it's a natural, we really need to build this out internally. We can't just primarily rent the technology to do this. People expect Morgan Stanley. They trust our brand to be no fail. And when you sit in that position, you have a significant responsibility to your clients to make sure that you're delivering that in any level of technology. So I think that's one of the things that we want to do. It's a totally different environment to know that you are custodying your assets. You have legal custody with Morgan Stanley and Morgan Stanley is overseeing those assets for you. There's always those that are going to want to self-custody. That's a natural part of the space, especially in the Bitcoin space. I think for some of you in the room that may not know my background, prior to being in the digital asset strategy space, I ran our emerging market investing business for the last 13 years and I've been at the firm for 26. So my entire background in emerging markets, as you can imagine, the adoption of Bitcoin and cryptocurrency, I mean I think we lead 17 of the top 20 markets of adoption around the world. This has been a very, very long journey for me being on the ground with many of these companies and investors and users of cryptocurrencies early on. So, you know, one of the things that we really want to do is just make sure as this continues to mainstream and institutionalize that we're being able to provide those services to clients.
That's pretty exciting. So you're going to offer the ability to custody and buy and sell crypto and Bitcoin specifically and probably some other coins. Do you think you'll offer yield and lending services against that Bitcoin?
