- Morgan Stanley launched the Morgan Stanley Ethereum Trust (MSSE) on July 28, 2026, with a 0.14% expense ratio, the lowest among U.S. spot ether ETFs.
- The fund stakes 50-80% of its ether holdings and passes all staking rewards to investors, a first for a major bank-affiliated ETF.
- Ethereum ETFs saw $1.83 billion in inflows over five days, though a single-day outflow of $70.62 million on July 24 interrupted the streak.
- The launch expands Morgan Stanley's crypto suite beyond Bitcoin, with total ETP assets under management exceeding $14 billion across 22 products.
Morgan Stanley has officially entered the Ethereum ETF arena with a product that undercuts every competitor on fees and adds a staking twist. The Morgan Stanley Ethereum Trust (MSSE) began trading on NYSE Arca on July 28, 2026, carrying an expense ratio of just 0.14% — the lowest among all U.S. spot ether funds. The launch, which also includes a companion Solana trust (MSOL), signals the bank’s deepening bet on digital assets beyond Bitcoin.
The new fund tracks the CoinDesk Ether Benchmark 4PM NY Settlement Rate and holds ether directly through custodians BNY Mellon and Coinbase. What sets MSSE apart is its staking feature: the trust plans to stake between 50% and 80% of its ether holdings, with any rewards passed through to shareholders. Morgan Stanley says it will not retain any portion of those rewards, making the fund a rare combination of low cost and yield potential in the regulated ETF wrapper.
A Fee War Winner and a Staking First
At 0.14%, MSSE undercuts every rival ether ETF on the market. The previous low was held by Grayscale’s Mini Ethereum Trust at 0.15%, while Franklin Templeton’s SOEZ was the cheapest Solana fund at 0.19%. Bloomberg Intelligence analyst Eric Balchunas called the pricing “the cheapest in the U.S. and world” for both ETH and SOL products. The fee advantage is permanent — not a temporary waiver — and applies from day one.
The staking component is equally notable. The trust’s registration documents set staking targets of 50% to 80% of ETH holdings and up to 100% of SOL, run through providers Figment, Galaxy, and Coinbase Canada, with service fees capped at 5%. A November 2025 IRS safe harbor (Revenue Procedure 2025-31) allows ETPs to stake a single proof-of-stake asset and pass rewards to investors without a separate tax charge, provided conditions like third-party custody and SEC-approved disclosures are met. Morgan Stanley’s structure complies with that framework, giving investors a tax-efficient way to earn staking income inside a brokerage account.
Institutional Demand for Ethereum ETFs Heats Up
Ethereum ETFs have been on a tear. Over a five-day period, spot ether products captured $1.83 billion in net inflows, dwarfing Bitcoin ETFs’ $171 million. Wednesday alone saw $310.3 million flowing into nine ether funds while 11 Bitcoin products managed just $81.1 million. The weekly tally from July 20 to July 24 showed Ethereum ETFs pulling in $103.9 million, nearly three times the $33.79 million for Bitcoin ETFs, according to SoSoValue data.
Investment advisers have taken notice. Goldman Sachs reported $712 million in Ethereum ETF exposure, leading the institutional charge. VanEck CEO Jan van Eck dubbed Ethereum “the Wall Street token” due to its dominance in stablecoins and tokenized assets. The trend accelerated after July’s passage of the GENIUS Act, which provided regulatory clarity for stablecoins and boosted confidence in Ethereum’s utility beyond store-of-value narratives.
Not all days were green. On July 24, Ethereum ETFs saw net outflows of $70.62 million, ending a five-day inflow streak. Bitcoin ETFs bled $240 million that same day, suggesting broader de-risking rather than a sector-specific shift. Despite the blip, the three-week cumulative inflows for Ethereum ETFs stand at nearly $294 million, close to Bitcoin’s $306 million. The category’s total aggregate inflows since launch have reached $13.6 billion over 13 months of trading.
Building on the Bitcoin Trust Success
MSSE follows the Morgan Stanley Bitcoin Trust (MSBT), which launched earlier in 2026 and gathered $381 million in assets under management by mid-July. MSBT carries the same 0.14% fee and was the first crypto ETP from a U.S. bank-affiliated asset manager. Ally Wallace, Global Head of ETFs at Morgan Stanley Investment Management, said the firm’s ETP suite now exceeds $14 billion in assets under management across 22 products, three of which are digital asset ETPs.
Distribution is a key differentiator. Morgan Stanley plans to offer MSSE through its wealth-advisor network and the E*TRADE retail platform, giving it a reach that rivals like BlackRock and Fidelity already have but with a lower fee and staking income. The bank’s size and advisor force, as noted by Bloomberg’s Balchunas, make this “the biggest ether and sol launch since the initial ETFs” in terms of potential capital flow.
The combination of Morgan Stanley’s distribution reach, the lowest fee on the market, and a staking mechanism that passes rewards to investors positions MSSE as a compelling option for both retail and institutional players. While the Ethereum ETF category is still young and prone to daily flow swings, the underlying trend points to growing acceptance of ether as a portfolio asset. With regulatory clarity from the GENIUS Act and a Wall Street giant now fully on board, the stage is set for further expansion of crypto ETFs in traditional portfolios.