Morgan Stanley Launches Ether and Solana ETPs With Staking

Morgan Stanley launches MSSE and MSOL on NYSE Arca

In its July 28 announcement, Morgan Stanley said both ETPs carry the same 0.14% expense ratio as its existing bitcoin product. It said its broader ETF and ETP suite exceeds $14 billion in assets under management across 22 products, while its bitcoin trust had more than $381 million in assets as of July 16.

MSSE tracks the CoinDesk Ether Benchmark 4PM NY Settlement Rate, while MSOL tracks the CoinDesk Solana Benchmark 4PM NY Settlement Rate. The distinction is important: the shares are exchange-traded interests in trusts, not tokens that investors can move to a wallet or use on Ethereum or Solana.

The final Ethereum prospectus says the trust intends to begin staking at the start of the offering, subject to legal, regulatory and tax considerations. It expects to make distributions of staking rewards monthly, but at least quarterly, under its stated approach to current U.S. tax guidance.

Morgan Stanley said it will not keep any of the rewards earned by either fund. Ally Wallace, the firm’s global head of ETFs, said in a staking-provider announcement that the products extend the bitcoin trust to the two largest proof-of-stake networks, with the funds expected to pass 95% of staking rewards to shareholders.

That is a significant difference from the original U.S. spot ether ETP rollout in 2024, when staking was absent from the products. The earlier Morgan Stanley crypto ETP filings had already laid out the possibility of staking in the ether and Solana trusts, but the July launch turns that design from a filing detail into a listed product feature.

Ether and SOL staking changes the ETP structure

Staking is the process of committing tokens to help validate transactions on proof-of-stake networks in return for token rewards. In this case, shareholders own fund shares, while designated providers handle validator operations and the trusts retain the underlying assets in segregated custody.

Figment said it was selected as a staking provider for both trusts. The firm said MSSE generally intends to stake 50% to 80% of its ether and MSOL may stake up to 100% of its SOL, although the allocations can vary with the funds’ liquidity policies.

The prospectus makes clear that the design has limits. The Ethereum trust says staked assets can be subject to slashing, a protocol-enforced loss if a validator misbehaves or performs poorly. It also warns that activation, exit and withdrawal queues can make assets temporarily illiquid and that there is no guarantee rewards will be earned.

Those mechanics make a fund’s staking allocation more than a marketing feature. A higher stake ratio may increase potential rewards, but a fund still needs assets available to meet creations, redemptions and expenses. Morgan Stanley’s filing says its sponsor will assess reliability, uptime and slashing history when allocating assets among third-party providers.

The same trade-off is beginning to move through the broader ETF market. Daily Crypto Briefs recently covered a proposed Ethereum validator contribution model that would direct a portion of staking revenue to public goods, illustrating how the cash-flow side of proof-of-stake is becoming a larger institutional and governance issue.

Morgan Stanley’s crypto lineup faces its first staking test

The launch follows MSBT, Morgan Stanley’s bitcoin trust, which began trading in April as the first crypto ETP from a U.S. bank-affiliated asset manager. Ether and SOL add two networks whose native assets can generate protocol rewards, but also introduce operational risks that a bitcoin tracker does not face.

Investors should not treat those rewards as a fixed yield. The release says rewards can vary substantially over time, and the prospectuses warn of validator, custodian, security and smart-contract risks. The shares can also trade above or below net asset value and the trusts are not registered investment companies under the Investment Company Act of 1940.

The launch also extends Morgan Stanley’s crypto distribution effort after the firm’s E*TRADE spot-trading rollout for eligible clients. The two routes serve different needs: direct trading gives customers token ownership, while an ETP uses a familiar brokerage wrapper and delegates custody and staking operations.

For now, the next useful datapoints are early trading volumes, assets gathered and the first fund disclosures on staking activity and distributions. Those figures, rather than the launch announcement alone, will show how much investor demand exists for a crypto ETP that combines price exposure with protocol rewards.