Morgan Stanley launches stablecoin reserve fund

Morgan Stanley Investment Management on April 23 launched the Stablecoin Reserves Portfolio (MSNXX), a government money market fund aimed at payment stablecoin issuers. The fund is part of the Morgan Stanley Institutional Liquidity Funds trust.

The portfolio seeks preservation of capital, daily liquidity and maximum current income while keeping a stable $1.00 net asset value for participants that back payment stablecoins. Morgan Stanley says the fund is structured to align with reserve investment requirements in the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.

Portfolio rules limit holdings to cash, U.S. Treasury bills, notes and bonds with maturities of 93 days or less, and certain overnight repurchase agreements collateralized by U.S. Treasury securities or cash. The limits keep holdings short term and reduce credit exposure.

Fred McMullen, co-head of Global Liquidity at Morgan Stanley Investment Management, noted growth in the number of stablecoin issuers and the assets held in stablecoins. “We are pleased to deliver a new investment solution to the marketplace that seeks to address the needs of stablecoin issuers,” McMullen said.

The launch follows other digital-asset initiatives from Morgan Stanley in April. The firm introduced the Morgan Stanley Bitcoin Trust, an exchange-traded product that seeks to track bitcoin performance, charges a 0.14% sponsor fee and references the CoinDesk Bitcoin Benchmark 4PM NY Settlement Rate. Morgan Stanley also added DAP Class shares to its Treasury Securities Portfolio for participation in BNY Mellon’s mirrored-record tokenization program. Those shares are available through BNY Mellon’s LiquidityDirect and Digital Asset platforms; share values are represented on a blockchain while official custody and records remain with BNY Mellon.

Amy Oldenburg, head of Digital Asset Strategy for Morgan Stanley, described the firm’s effort to broaden access to digital investment solutions and to build ways to work with stablecoin issuers as part of financial infrastructure modernization. “We are working to develop new solutions that improve institutional client experience and support evolving market structures,” Oldenburg added.

Financial advisor Ric Edelman pointed to Morgan Stanley’s roughly 16,000 financial advisors as a possible channel for client access to crypto-related products.

McMullen added the firm views the recent product rollouts as early-stage initiatives meant to provide options for institutional investors engaging with digital markets.