Morgan Stanley Bitcoin Fund attracts $29.4 million in investment in two weeks

A new private bitcoin fund from Morgan Stanley raised $29.4 million from 322 investors in 14 days, according to regulatory filings released Thursday.

The Morgan Stanley Bitcoin Fund is managed by closed-end management investment firm FS Investments, with NYDIG providing custody of the bitcoin. The fund is one of two new bitcoin investment vehicles offered by banking giant Morgan Stanley.

FS Investment Corporation (formerly FS KKR Capital Corp) is an externally managed single-family closed-end management investment company. The company's investment objective is to generate current income and long-term capital appreciation. The company's investment portfolio consists primarily of senior secured and second lien secured loan investments in U.S. mid-sized private companies and subordinated loan investments in U.S. private companies.

Early returns from FS NYDIG Select Bitcoin Fund LP show that investors are indeed eager to gain access to Bitcoin products through their institutional managers. Passive funds like Morgan Stanley's provide an easy way to enter the asset class for clients who don't want to keep their own private keys.

In just 14 days, Morgan Stanley’s FS/NYDIG fund has become one of the most popular private bitcoin vehicles by number of investors, handily beating out more established industry offerings from Pantera and Galaxy, according to fund data compiled by CoinDesk. (Galaxy took a Morgan Stanley bitcoin investment in an early fund.)

Seeking exposure to bitcoin through a fund is not without its drawbacks. Morgan Stanley limits clients to 2.5% of their total net worth in bitcoin. And they must have a net worth of at least $2 million. According to documents obtained by CoinDesk, Morgan Stanley investors must pay a 3% upfront fee for bitcoin investments under $250,000. The average investment in Morgan Stanley's new bitcoin fund is about $91,000, and Morgan Stanley will receive a placement fee.