What You Need to Know About the Stablecoin Reserves Portfolio

The Stablecoin Reserves Portfolio (MSNXX) is a government money market fund situated within the Morgan Stanley Institutional Liquidity Funds trust. It specifically targets stablecoin issuers who require an investment vehicle that meets regulatory compliance for reserve backing of their digital tokens.

According to Morgan Stanley, the fund is structured to preserve capital, offer daily liquidity, and maximize current income while maintaining a stable $1 net asset value. This makes it a reliable choice for those seeking secure and compliant investment solutions.

Investment Strategy and Asset Allocation

The fund invests exclusively in highly liquid assets, including cash, U.S. Treasury bills, notes, and bonds with maturities of 93 days or less, along with select overnight repurchase agreements backed by U.S. Treasury securities. These conservative investments ensure the fund’s stability and compliance with the GENIUS Act.

Amy Oldenburg, head of digital asset strategy at Morgan Stanley, emphasized the firm’s commitment to evolving financial markets. She stated, “By collaborating with stablecoin issuers, we are expanding access to digital investment solutions that cater to institutional clients’ needs.”

Expanding Digital Assets and Institutional Reach

This new fund is part of Morgan Stanley Investment Management’s broader initiative to expand its digital asset offerings. Earlier this month, the firm introduced the Morgan Stanley Bitcoin Trust (MSBT), which has already attracted over $172 million in net inflows. Such initiatives highlight Morgan Stanley’s proactive approach to integrating digital assets into traditional finance.

With $1.9 trillion in assets under management as of March 31, 2026, Morgan Stanley continues to position itself as a leader in providing innovative financial solutions. The launch of the Stablecoin Reserves Portfolio marks another milestone in their journey toward modernizing the financial landscape.

For stablecoin issuers and investors alike, this fund offers a compliant and secure option for managing reserve assets, paving the way for greater adoption and integration of digital currencies in mainstream finance.

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Morgan Stanley Loan: A Strategic Move

The newly secured facility from Morgan Stanley offers Core Scientific the financial flexibility needed to pivot towards high-density colocation services tailored for AI workloads. The accordion feature within the loan agreement allows an increase in funding commitments by an additional $500 million, potentially raising the total to $1 billion.

Investment in AI Infrastructure

Core Scientific plans to utilize the loan to acquire real estate, cover pre-development costs, and secure energy contracts essential for supporting compute-intensive tasks. The funds will also facilitate the purchase of equipment necessary for transforming existing facilities in Texas, Georgia, and North Carolina.

CEO Adam Sullivan highlighted that the financing strengthens liquidity, enabling decisive capital deployment to accelerate project timelines, making Core Scientific an attractive choice for infrastructure provisioning.

Transition from Bitcoin Mining

As Core Scientific transitions from its traditional bitcoin mining operations, it plans to monetize its bitcoin reserves to fund this strategic pivot towards AI infrastructure. In 2026, the company expects to liquidate nearly all its bitcoin holdings to support this new direction. By the close of 2025, Core Scientific held 2,537 BTC valued at $222 million, marking a significant increase from 256 BTC at the end of 2024.

In January, the company sold over 1,900 BTC for approximately $175 million, leaving it with around 630 BTC. Sullivan noted that bitcoin mining is now in a maintenance mode, primarily utilized to meet minimum power commitments as they convert legacy sites for AI-focused operations.

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The GIC identifies crypto as an “emerging, speculative asset class” that has evolved to become an essential part of diversified portfolios. Notably, Bitcoin is referred to as “digital gold,” signifying its potential as a stable investment option.

Why Crypto Allocation is Essential

Institutional interest in cryptocurrencies is on the rise, driven by solid returns, market stabilization, and favorable crypto policies. The GIC report highlights these factors as significant reasons for integrating crypto into investment strategies.

Strategic Crypto Allocation Recommendations

The GIC suggests initial crypto allocations should be capped at 2% for balanced growth portfolios, 3% for market growth, and 4% for opportunistic growth strategies. Investors with a focus on capital preservation or income generation are advised to steer clear of this asset class due to its inherent volatility.

Moreover, the committee recommends managing volatility through exchange-traded products and regular rebalancing, either quarterly or annually. This approach helps prevent crypto holdings from expanding excessively during market upswings.

“This is huge,” commented Hunter Horsley on the GIC report, emphasizing the mainstream acceptance of cryptocurrencies.

Morgan Stanley’s Pioneering Crypto Moves

Morgan Stanley continues to expand its crypto footprint as one of the first Wall Street institutions to approve Bitcoin ETF recommendations for its clients. The bank has partnered with Zerohash to enable crypto trading for E*Trade users and is set to launch a structured digital asset allocation strategy across its wealth management platform.

These steps reinforce Morgan Stanley’s commitment to integrating crypto allocation into traditional finance, marking a significant shift towards mainstream adoption.

As the crypto market continues to mature, investors are encouraged to consider these strategic allocations to diversify and potentially enhance their portfolios.

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“A considerable amount of work has been done and we believe both the industry and ourselves will present suitable solutions,” stated Moynihan, CEO of the US’s second-largest bank. “We are still assessing the magnitude of this development as in some areas, the movement of large sums of money isn’t occurring. Hence, it is likely that we, along with others, will gravitate towards this,” Moynihan informed analysts during a post-earnings conference call.

Stablecoins are a unique form of cryptocurrency designed to hold a steady value, usually tied to a fiat currency such as the US dollar. They are frequently used by cryptocurrency traders for fund transfers between tokens.

Bank of America is still gauging client demand, which is currently not high, and plans to launch a stablecoin when the timing is right, possibly in collaboration with other entities. U.S. President Donald Trump has pledged to be the “crypto president,” promoting its widespread use in the nation.

In the meantime, Morgan Stanley, a Wall Street lender, stated that it is still considering its options. Chief Financial Officer Sharon Yeshaya mentioned that the bank is closely following the progress of stablecoins.

“We are actively discussing it, assessing both the current landscape and potential uses for our client base. However, it’s still too early to tell, especially considering the nature of our operations versus those of our competitors, how a stablecoin would fit in,” she added.

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Bitcoin’s Historical Performance: Historically, the lowest point for Bitcoin has been observed approximately 12 to 14 months post its peak performance. For instance, after reaching a record high of nearly $68,000 in November 2021, Bitcoin experienced a dip, bottoming out a year later. Denny Galindo, a strategist at Morgan Stanley, mentioned, “When Bitcoin’s price surges by 50% from its lowest point, it usually indicates that the worst is behind.” Remarkably, Bitcoin has shown a 70% growth year-to-date and a 77% rise from its previous year’s lows.

Significance of Bitcoin’s Price Fluctuations: The extent of Bitcoin’s price reduction is crucial to understanding its market position. Historically, Bitcoin’s price lows were around 83% below their peak values. By November 2022, BTC had seen a decline of nearly 77%, settling around $16,000.

The Halving Phenomenon and Its Impact: One of the pivotal events in the Bitcoin ecosystem is the ‘halving’. This event, which takes place approximately every four years, reduces the reward for successfully mining a Bitcoin block by half. This mechanism is designed to curb inflationary pressures on Bitcoin. Galindo elaborated, “The intentional reduction in Bitcoin’s supply due to halving can influence its price, potentially triggering a bullish phase.” Historically, Bitcoin has witnessed three such bullish phases, each lasting between 12 to 18 months post the halving event.

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According to the website of the Crypto Council for Innovation, the alliance aims to increase awareness of the various benefits of cryptocurrencies to regulators and policymakers. The website mentions such benefits as boosting economic growth, creating jobs, improving privacy, and improving financial inclusion. In particular, the group aims to generate more awareness about crypto and its benefits. Achieving this would involve educating policymakers, establishing government relations, and performing research in the crypto space, the website says.

Some altcoins have performed very well in the past week. As a result, on Monday, April 5, the price increase of many tokens at once has pushed the crypto market cap over $2.02 trillion, although it is now down to around $1.88 trillion, per CoinMarketCap.com data.

The establishment of the Crypto Council for Innovation also comes during the time of increasing adoption of cryptocurrencies by institutions. Cryptocurrencies are part of portfolios of companies like Tesla, MicroStrategy, Square, and Meitu. Moreover, Goldman Sachs and Morgan Stanley recently started offering digital investment support for their wealthy clients.

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However, not only the two largest cryptocurrencies have seen a price increase. Binance Coin (BNB), the third-largest crypto, is up by over 10% in the past 24 hours. In addition, it is up by almost 40% in the past 7 days, per CoinMarketCap.com data. The fifth and the sixth-ranked cryptos Polkadot (DOT) and Ripple’s XRP increased in price by over 31% and 50% in the past 7 days, respectively.

Increasing cryptocurrency adoption could be the reason why Bitcoin and altcoins post gains. Two of the world’s leading investment banks, Goldman Sachs and Morgan Stanley, started offering access to digital assets for their wealth management clients. Payment networks Visa and PayPal have introduced crypto payment support. Moreover, automaker Tesla started accepting Bitcoin for payments in the U.S.

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At the beginning of March, Goldman Sachs announced the reopening of its crypto desk. In particular, the desk deals with Bitcoin futures contracts and non-deliverable forwards. Initially, the company planned to open a Bitcoin trading desk in 2018. However, back then they put the initiative on hold.

In another exclusive report from CNBC earlier this month, another major investment bank, Morgan Stanley, revealed that it would offer its wealthy clients access to Bitcoin funds. Morgan Stanley has made other moves in the cryptocurrency space since then. According to Forex Crunch, the bank reportedly planned to make an investment in the Korean cryptocurrency exchange Bithumb. This happened shortly after the announcement. Moreover, yesterday CoinDesk reported that Morgan Stanley enabled some of its mutual funds to make indirect investments in Bitcoin.

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