Morgan Stanley Sets Up Digital Asset Lab to Test Stablecoins, Tokenization and DeFi

Morgan Stanley has set up a dedicated research lab to test stablecoins, asset tokenization and decentralized finance, or DeFi.

Bloomberg reported on September 29 that Morgan Stanley recently established the Digital Asset Lab. The facility is designed to test cryptocurrencies and blockchain technology in a separate environment that does not affect the bank’s core systems.

The lab will test a range of digital currencies and assets, including stablecoins, tokenization technology, tokenized deposits, central bank digital currencies, or CBDCs, and tokenized money-market funds.

Amy Oldenburg, Morgan Stanley’s head of digital assets, said the Digital Asset Lab will let the bank test new digital-asset technologies in a safe, ring-fenced environment that complies with regulations.

Morgan Stanley is paying particular attention to DeFi vault technology. A vault automatically deploys digital assets such as stablecoins deposited by investors across multiple DeFi markets based on preset strategies. It resembles a traditional investment fund, but blockchain can automate part of its operation and management.

Oldenburg said vaults could eventually become part of financial markets. But because the technology is still in its early stages, the bank first needs to understand how it works to avoid creating risks for the broader platform.

Morgan Stanley is also expanding its digital-asset business, including by launching cryptocurrency trading through E*Trade this year.