Morgan Stanley Supports Stablecoin Issuers With New Fund for Reserves

Morgan Stanley Investment Management (MSIM) has launched a new government money market fund designed to meet the needs of payment stablecoin issuers that are looking to invest the reserves that back their outstanding payment stablecoins.

The new Stablecoin Reserves Portfolio (MSNXX) is designed to align with the stablecoin reserves investment requirements of the GENIUS Act, the company said in a Thursday (April 23) press release.

This investment solution targets preservation of capital, daily liquidity and maximum current income. It invests only in cash, U.S. Treasury bills, notes and bonds with remaining maturities of 93 days or less, as well as overnight repurchase agreements collateralized by U.S. Treasury securities and/or cash, according to the release.

“The significant increase in stablecoin issuers as well as the growing number of assets held in stablecoins represents an evolving portion of the marketplace that is ripe for future growth,” Fred McMullen, co-head of global liquidity at Morgan Stanley Investment Management, said in the release.

Morgan Stanley is pursuing a firm-wide strategy of expanding access to digital investment solutions, making them more broadly accessible to all client segments, Amy Oldenburg, head of digital asset strategy at Morgan Stanley, said in the release.

“Developing innovative ways to work with stablecoin issuers is another step towards modernizing the financial infrastructure and a key way to improve our institutional clients’ experience,” Oldenburg said.

In another initiative in this area, PYMNTS reported in February that Morgan Stanley submitted an application to the Office of the Comptroller of the Currency (OCC) for a charter for a new institution called “Morgan Stanley Digital Trust, National Association” as a national trust bank with requested trust powers.

The application is an attempt to stand up a new federally chartered legal entity optimized for digital asset activity. The goal for the new institution is Morgan Stanley trying to own the custody, settlement and fiduciary plumbing layer of blockchain finance under U.S. bank supervision, according to the report.

In January, it was reported that Morgan Stanley was entering the cryptocurrency exchange-traded fund (ETF) space by submitting paperwork for a Bitcoin Trust and a Solana Trust, each of which would hold the individual cryptocurrencies.