Morgan Stanley Bitcoin Trust Names Coinbase and BNY as ETF Custodians

Key Takeaways

Morgan Stanley filed an amended S-1 with the SEC on March 4, 2026, for its proposed spot Bitcoin ETF.
Coinbase Custody Trust Company and BNY will serve as the fund’s two bitcoin custodians.
BNY takes on additional roles as administrator, transfer agent, and cash custodian.
The fund will price shares using the CoinDesk Bitcoin Benchmark 4PM New York Settlement Rate.
Most bitcoin holdings will stay in offline cold storage, with a small portion temporarily in hot wallets during share creation and redemption.

Morgan Stanley filed an amended S-1 registration statement with the SEC on March 4, 2026, for its proposed spot Bitcoin ETF. The filing names two custodians for the fund’s bitcoin holdings: Coinbase Custody Trust Company and The Bank of New York Mellon (BNY). This dual-custodian structure separates the digital asset safekeeping from traditional fund administration functions, mirroring how institutional-grade investment products handle assets across regulated markets.

The fund, called the Morgan Stanley Bitcoin Trust, plans to list on NYSE Arca and will track the CoinDesk Bitcoin Benchmark 4PM New York Settlement Rate. It will hold bitcoin directly rather than using futures or derivatives.

NEW: Morgan Stanley names Mellon and Coinbase as custodians for its planned Bitcoin ETF. pic.twitter.com/aBtVeqaHfF
— Bitcoin News (@BitcoinNewsCom) March 5, 2026

How Does the Dual-Custodian Model Work?

Most spot Bitcoin ETFs rely on a single custodian to hold digital assets. The Morgan Stanley Bitcoin Trust uses two, splitting responsibilities between a crypto-native firm and a traditional financial institution. Each plays a different but complementary role in keeping the fund’s assets secure and operationally sound.

Coinbase as the Digital Asset Custodian

Coinbase Custody Trust Company handles the direct safekeeping of the fund’s bitcoin. It is chartered as a New York state limited liability trust company, which gives it a regulated foundation for digital asset custody. The filing states that the Coinbase Custodian uses multi-layer cold storage vaults where private keys remain completely offline. This limits exposure to hacking or unauthorized transfers.

Coinbase also serves as the fund’s prime broker. In that capacity, it facilitates bitcoin purchases and sales connected to share creations and redemptions. A small portion of the fund’s bitcoin may temporarily move to hot wallets when trades settle, but the vast majority stays in cold storage at all times. The filing confirms that no single employee at the Coinbase Custodian has access to complete private keys.

BNY as the Traditional Finance Backbone

BNY serves four distinct roles within the fund structure. These roles cover the operational and record-keeping side of the ETF.

Fund administrator – calculates net asset value (NAV) daily and handles accounting.
Transfer agent – processes share creations and redemptions and maintains shareholder records.
Cash custodian – holds and moves cash associated with ETF transactions.
Bitcoin custodian – alongside Coinbase, holds a portion of the fund’s bitcoin.

BNY is chartered as a New York state bank, which means it operates under a different regulatory framework than Coinbase. The separation between the two custodians adds a layer of redundancy. If one encounters an operational issue, the other can continue managing assets. This setup also spreads counterparty risk across two independently regulated entities.

How Does the Fund Price Its Shares?

The Morgan Stanley Bitcoin Trust will calculate its NAV using the CoinDesk Bitcoin Benchmark 4PM New York Settlement Rate. This benchmark aggregates trading activity from major spot bitcoin exchanges over a 60-minute window ending at 4:00 PM Eastern Time each business day.

The methodology uses volume-weighted medians across equal time partitions to reduce the impact of any single large trade. The result is a daily reference price that the fund says is designed to resist manipulation. The BNY administrator uses this figure to determine the fund’s NAV after the market closes.

The filing notes that NAV calculations under this benchmark may differ slightly from GAAP-based fair value measurements, which use the principal market price at the same time. Both figures will be published, and the fund will report the GAAP-based version in its financial statements.

What Are the Key Custody Security Measures?

The filing describes several security layers that both custodians apply to protect the fund’s bitcoin.

The primary safeguards mentioned in the S-1 include:

Cold storage – Private keys are stored on hardware that has never connected to the internet. All movement from cold to hot storage requires physical access to a secure facility and multi-party approval.
Multi-Party Computation (MPC) – Key shares are distributed across isolated environments so no single point of compromise can expose a full private key.
Hardware Security Modules (HSMs) – Dedicated cryptographic devices manage and store key fragments with role-based access controls.
Whitelisting – Bitcoin can only be sent to pre-approved, verified addresses. Adding or removing an address requires two-factor authentication and consensus approval.
Audit trails – All bitcoin movements within custodian-controlled wallets are logged and audited annually by an independent external firm.

Both custodians carry commercial crime insurance that covers theft, employee fraud, and security breaches. The filing acknowledges that this insurance is shared across all customers and may not cover the full value of any loss.

Authorized Participants are the only parties that can create or redeem shares directly with the Trust. They can do so either in cash or in-kind by delivering bitcoin.

For cash orders, an Authorized Participant deposits cash with BNY, which triggers the Delegated Sponsor to instruct a Bitcoin Counterparty to purchase an equivalent amount of bitcoin. That bitcoin then goes into the Coinbase or BNY custodian account. For in-kind orders, the Authorized Participant deposits bitcoin directly into the Trust’s custody accounts.

Redemptions follow the reverse process. The Trust transfers bitcoin to a Bitcoin Counterparty for conversion to cash, which then goes to the Authorized Participant. Any trading costs or slippage during this process are the responsibility of the Authorized Participant, not the Trust.

This structure keeps the Trust itself passive. It does not buy or sell bitcoin on open markets outside of creation and redemption activity.

How Does This Compare to Other Spot Bitcoin ETFs?

Most approved spot Bitcoin ETFs in the United States use a single custodian. Coinbase Custody already serves as the primary custodian for several major spot Bitcoin ETF products. What sets the Morgan Stanley Bitcoin Trust apart is the addition of BNY as a co-custodian, alongside its broader administrative and cash management roles.

This is the first time a major Wall Street bank has proposed a direct bitcoin custody role within an ETF structure. BNY’s involvement signals growing comfort from the traditional banking sector with holding digital assets on behalf of regulated funds. It also reflects the broader trend of institutional Bitcoin adoption accelerating in 2026.

The dual structure also gives Morgan Stanley Investment Management more operational flexibility. If either custodian faces issues, the fund can shift holdings to the other without disrupting share creation or redemption. Learn more about how hardware wallets and custody solutions compare for institutional-grade security setups.

Frequently Asked Questions

Who Are the Bitcoin Custodians for the Morgan Stanley Bitcoin Trust?

The Trust named two bitcoin custodians in its March 4, 2026, S-1 filing: Coinbase Custody Trust Company and The Bank of New York Mellon (BNY). Both are chartered financial institutions with regulated custody operations.

What Role Does BNY Play Beyond Bitcoin Custody?

BNY serves as the fund administrator, transfer agent, and cash custodian in addition to its role as a bitcoin custodian. This means BNY handles daily NAV calculations, shareholder records, and cash flows tied to share transactions.

How Does the Fund Store Its Bitcoin?

The vast majority of the fund’s bitcoin stays in offline cold storage. Private keys are generated and stored on hardware that has never connected to the internet. A small portion may move to hot wallets temporarily during share creation or redemption activity.

What Benchmark Does the Fund Use to Value Its Shares?

The Trust uses the CoinDesk Bitcoin Benchmark 4PM New York Settlement Rate. This benchmark aggregates executed trade flow from major spot exchanges each business day, using a volume-weighted median methodology to limit the influence of any single large trade.

Has the Morgan Stanley Bitcoin Trust Been Approved by the SEC?

As of the March 4, 2026 filing, the Trust submitted an amended S-1 registration statement. The SEC has not yet declared the registration effective, meaning the fund has not received final approval to begin trading shares on NYSE Arca.