Wall Street's Bitcoin Blueprint: Citi and Morgan Stanley Build Custody Rails

Traditional Finance Builds the On-Ramps Bitcoin Needs

The infrastructure that will bring Bitcoin to mainstream finance is being built right now, and it's happening faster than many expected. While Bitcoin's price volatility continues to dominate headlines, two of Wall Street's largest institutions are quietly constructing the custody, reporting, and compliance frameworks that could unlock trillions in institutional capital. At the same time, European investors are gaining novel exposure to Bitcoin through instruments designed to appeal to income-focused portfolios rather than speculation. Together, these developments signal that Bitcoin is transitioning from a fringe asset to a permanent fixture in the global financial architecture.

The Facts

Citi announced plans to launch Bitcoin infrastructure later this year that integrates the cryptocurrency into traditional financial systems, according to Nisha Surendran, head of digital asset custody development at the bank ^[2]. Speaking at Strategy World, an industry conference hosted by Bitcoin treasury firm Strategy, Surendran outlined a three-pronged approach centered on custody, integration with existing reporting and tax systems, and simplified client access to digital assets ^[2].

"Later this year, Citi will be launching our infrastructure that integrates Bitcoin into traditional finance," Surendran said, explaining that the initiative will begin with "core custody and safekeeping capabilities, institutional-grade key management, and wallet infrastructure" ^[2]. The service will allow Citi's clients to manage Bitcoin positions alongside traditional assets within the same reporting channels, tax workflows, and compliance frameworks they currently use ^[2]. Clients will not need to manage wallets, private keys, or one-time addresses themselves, as Citi will handle these processes through its infrastructure ^[2]. The bank manages approximately $30 trillion in client assets across securities and money market products ^[2].

Morgan Stanley is pursuing a similar strategy, announcing plans at the same conference to expand its digital asset offerings with a native crypto custody and exchange platform ^[2]. The bank will initially enable E-Trade clients to buy and sell spot cryptocurrencies through a partnership, with a fully integrated platform expected within the next year ^[2]. Morgan Stanley's planned custody solution would give clients legal control of their assets under the bank's oversight, though some may continue self-custody, particularly for Bitcoin ^[2]. The firm is also exploring crypto yield and lending products, leveraging its $8 trillion asset base to bring off-platform holdings onto its platform ^[2].

Meanwhile in Europe, 21Shares launched the Strategy Yield ETP (ticker: STRC NA) in Amsterdam, marking the first product from the crypto ETP pioneer that provides exposure not directly to Bitcoin, but to Strategy's Series A preferred shares ^[1]. The preferred shares offer variable dividends currently exceeding 11 percent, funded by Strategy's Bitcoin and dollar reserves ^[1]. "STRC or digitaler Kredit is der Weg, auf dem wir die nächste Generation von Privatanlegern in diesen [Bitcoin-]Bereich holen können. Und ich wüsste nicht, warum wir nicht 10- bis 100-mal so viele anziehen könnten," Strategy's Michael Saylor said in a recent interview ^[1].

Duncan Moir, President of 21Shares, explained that "Das 21shares Strategy Yield ETP unterstreicht unseren Anspruch auf Innovation und Führungsrolle als erstes ETP von 21shares, das an ein aktienbezogenes Instrument gekoppelt ist" ^[1]. Strategy CEO Phong Le welcomed the European expansion, stating that the product provides access "zu einem neuen Kapitalmodell – einem Modell, das es vor fünf Jahren noch nicht gab und von dem wir glauben, dass es die nächsten 50 Jahre prägen wird" ^[1]. Strategy currently holds 717,722 BTC worth approximately $47 billion, maintaining its position as the largest corporate Bitcoin holder ^[1].

Analysis & Context

The simultaneous moves by Citi and Morgan Stanley represent something more significant than incremental product launches—they signal that Bitcoin has crossed a threshold of institutional legitimacy that demands proper infrastructure. For years, the primary barrier to institutional Bitcoin adoption wasn't skepticism about the asset itself, but the absence of custody solutions that met the operational, regulatory, and fiduciary standards these institutions require. By building native custody infrastructure rather than partnering with crypto-native firms, these banks are making a statement: Bitcoin is here to stay, and we need to own this capability in-house.

The custody infrastructure these banks are building solves a critical problem that has constrained Bitcoin adoption among wealth management clients. Most high-net-worth individuals and institutions don't want to manage private keys or navigate unfamiliar interfaces. They want Bitcoin to appear on the same monthly statement as their bonds and equities, with the same tax reporting and compliance oversight. By embedding Bitcoin into existing workflows, Citi and Morgan Stanley are removing the operational friction that has kept many traditional investors on the sidelines.

The European launch of the Strategy Yield ETP reveals a complementary approach to Bitcoin integration—creating hybrid instruments that offer Bitcoin exposure with traditional income characteristics. The 11 percent dividend appeals to income-focused investors who might never buy Bitcoin directly but are attracted to yield. This strategy acknowledges a fundamental truth about capital allocation: most institutional money isn't looking for maximum volatility, it's looking for risk-adjusted returns within specific mandates. By structuring Bitcoin exposure as a dividend-paying preferred share, 21Shares and Strategy are expanding the addressable market beyond risk-seeking speculators to include pension funds, insurance companies, and conservative wealth managers.

Historically, every major asset class has required this kind of infrastructure development before achieving mainstream adoption. Gold didn't become a standard portfolio allocation until custody, futures markets, and ETFs made it accessible within existing investment frameworks. Bitcoin is following the same path, but compressed into a much shorter timeframe. The fact that two of the world's largest banks are building this infrastructure simultaneously—and publicly—suggests we're approaching an inflection point where Bitcoin custody becomes table stakes for any major financial institution.

Key Takeaways

• Citi and Morgan Stanley are both building native Bitcoin custody infrastructure, signaling that major banks now view Bitcoin integration as essential rather than experimental, with services expected to launch within the next year.

• The infrastructure being developed will allow clients to manage Bitcoin within existing reporting, tax, and compliance frameworks, eliminating the operational friction that has constrained institutional adoption.

• The 21Shares Strategy Yield ETP offers European investors Bitcoin exposure through dividend-paying preferred shares yielding over 11 percent, expanding Bitcoin's appeal beyond volatility-seeking investors to income-focused portfolios.

• These developments collectively represent Bitcoin's transition from alternative asset to core financial infrastructure, as institutions build the custody rails needed to serve trillions in client assets.

• The coordinated timing of these announcements—and their public nature—suggests the traditional finance industry is moving past the question of whether to integrate Bitcoin and is now focused on how quickly they can build the necessary capabilities.