Key Insights: Morgan Stanley Says Bitcoin Reserve Status Could Be Within Reach

Morgan Stanley's latest report suggests Bitcoin reserve status could be within reach. Meanwhile, some U.S. states are retreating from plans to integrate cryptocurrency into their financial strategies.

U.S. states are pulling back from plans to integrate cryptocurrency into their financial strategies, diverging from moves by emerging economies and global institutions, according to a new analysis by Morgan Stanley.

The investment bank said that the growing market capitalization of Bitcoin (BTC) and the declining volatility of its price could put it within reach of reserve status.

Meanwhile, Florida lawmakers have scuttled two bills that would have created a state-level Bitcoin reserve.

The bills, which were filed earlier this year, would have allowed state officials to invest some public funds in the leading cryptocurrency.

House Bill 487, filed by Republican Rep. Gaston Schिवली, and Senate Bill 550, filed by Republican Sen. Bill stated that state officials could invest up to 10% of certain state funds, including the Florida Opportunity Trust Fund and the Florida Economic Development and Transportation Fund, in digital assets.

However, both bills were tabled and subsequently withdrawn by the Florida Senate on May 3, effectively killing the proposals.

The legislative session ended that day without including any of the Bitcoin-related proposals, even as lawmakers passed more than 200 other bills.

Lawmakers did not provide an apparent reason for pulling the bills. But legislative priorities and concerns about crypto investments may have influenced their decision.

Florida joins Wyoming, South Dakota, and Montana, where similar proposals failed to advance in 2025.

Bitcoin Reserve Status: Growing Potential and Market Evaluation

Morgan Stanley published a report exploring the potential for Bitcoin to achieve reserve currency status and its role as a global asset.

The bank acknowledged that, unlike traditional reserve currencies, Bitcoin is known for its volatility, which has been a key discussion point.

Despite this difference, the investment observed that the cryptocurrency’s volatility has gradually declined over time, and its market capitalization has grown significantly, reaching $760 Billion by May 2024.

In comparison, the market capitalization of major global currencies, such as the U.S. dollar, euro, Japanese yen, and British pound, is estimated at about $3.5 Trillion.

This analysis suggests that allocating $370 Billion to Bitcoin would reflect its existing share in the currency market. Moreover, 12% to 17% of Bitcoin’s supply would align with these major global currencies.

This estimation highlights Bitcoin’s growing role in global finance. As policymakers determine the role of digital assets in sovereign and institutional investments, many are examining how these assets fit into broader financial strategies.

“The market cap is now large enough to be considered for reserve allocation,” the report stated. However, it also noted that risks remain due to price fluctuations.

Florida Pulls Back on Plans for Cryptocurrency Reserve

Earlier this year, Florida lawmakers were advancing plans to introduce Bitcoin into state finances with the creation of a cryptocurrency reserve.

The proposals emerged as part of broader efforts by U.S. states to engage with cryptocurrency and blockchain technology.

Both the state house and senate were considering bills that would have allowed portions of state funds to be invested in digital assets.

House Bill 487, filed by Republican Rep. Gaston Schिवली, and Senate Bill 550, filed by Republican Sen. Bill stated that state officials could invest up to 10% of certain state funds, including the Florida Opportunity Trust Fund and the Florida Economic Development and Transportation Fund, in digital assets.

The bills also included provisions for a state-level reserve to be managed by state officials.

However, on May 3, the Florida Senate confirmed that both bills were tabled and subsequently withdrawn from consideration for the remainder of the legislative session.

The legislative session ended that day without including any of the Bitcoin-related proposals, even as lawmakers passed more than 200 other bills.

Lawmakers did not provide an apparent reason for pulling the bills. But legislative priorities and concerns about crypto investments may have influenced their decision.

Earlier this year, lawmakers in Wyoming, South Dakota, and Montana also pulled back on plans for a state-level Bitcoin reserve after failing to gain sufficient support for the proposals.

Arizona lawmakers passed a bill that would have allowed the state to invest seized funds in Bitcoin and established a reserve managed by state officials.

Despite legislative approval, Governor Katie Hobbs decided against signing the bill.

In her veto message, Governor Hobbs said that Arizona’s retirement funds should not be used for untested investments. Virtual currency, she added, is not yet suitable for state-managed funds.

This decision was in line with her earlier statements that she would not support any legislation without bipartisan support for disability funding.

However, supporters of the bill said that they would continue to push for it to be passed next year.

Arizona Senator Wendy Rogers, a key supporter of the cryptocurrency initiative, said that she planned to refile the bill at the next legislative session.

Two other bills related to cryptocurrency in Arizona are still active.

House Bill 2749, filed by