In the Arena | November 1, 2025

“3 observations and a chart” on the latest in the digital assets sector

Morgan Stanley recommends financial advisors and clients add crypto to multi-asset portfolios

The institutional embrace of digital assets continues to accelerate. Last month, Morgan Stanley became the latest global bank to formally recommend crypto exposure within client portfolios, advising up to a 4% allocation depending on risk profile—primarily to Bitcoin—through regulated ETF vehicles. The bank’s Global Investment Council characterized Bitcoin as a “scarce asset akin to digital gold” and suggested rebalancing quarterly as part of a diversified growth strategy. The recommendation aligns Morgan Stanley with the 3–5% “reasonable range” outlined by BlackRock and Grayscale, reinforcing a growing consensus that crypto has earned a strategic role in modern asset allocation. We highlight that Morgan Stanley’s endorsement to 16,000 advisors overseeing $2 trillion in client wealth underscores a broader inflection point: mainstream finance is no longer debating the if of digital assets, but institutionalizing the how much.

Crypto regulation spurs institutional entry — U.S. is transitioning from ambiguity to allocation

The regulatory landscape for digital assets took a meaningful turn this year, creating the frameworks that draw institutional capital. First, the GENIUS Act, signed into law on July 18, 2025, established a comprehensive federal framework for payment stablecoins. The legislative shift elevated dollar-pegged stablecoins—once used chiefly in crypto trading—into the realm of mainstream financial plumbing. Since its passage, the global stablecoin market cap has expanded from $200 billion to over $300 billion, while on-chain transaction volumes have surged to roughly $46 trillion year-to-date—a figure nearly triple Visa’s annual network throughput. Second, the CLARITY Act (H.R. 3633) is advancing through Congress, promising a defined taxonomy, clearer regulatory jurisdiction, and improved “know-the-rules” confidence for issuers, platforms, and funds. That framework paves the way for larger institutional allocations of capital into the sector. We highlight that regulatory clarity is not a passive tailwind, but an active enabler of institutional flow.

Intercontinental Exchange bets big on blockchain-based prediction platform Polymarket

In a landmark deal for the digital asset ecosystem, Intercontinental Exchange (ICE)—parent company of the New York Stock Exchange—announced a $2 billion all-cash investment in blockchain-based prediction platform Polymarket, valuing the company at $9 billion. The transaction represents the largest private investment ever in a crypto firm and makes founder Shayne Coplan the youngest self-made billionaire in the world. Polymarket, best known for its crowd-driven accuracy during the 2020 and 2024 U.S. elections, enables users to trade on outcomes across politics, sports, and global events. We again (October 1, 2024) highlight how blockchain based prediction markets harness the collective intelligence about real world events and use financial incentives to provide dependable and dynamic real-time expectations about the probabilities of world events. 

Chart of the Month – 716mm global crypto owners and 40-70mm active monthly users

Source: “State of Crypto 2025: The year crypto went mainstream,” a16z. October 22, 2025.  

Arena Digital Capital Partners is a liquid evergreen fund open to monthly subscriptions. We are always happy to discuss further with you or investors you think may have an interest in the sector. Please reach out to Bill Cline at williamc@arenadigital.capital.

Sincerely,

The Arena Digital Capital Management Team

Michael Schwartz, Michael Prober & William Cline

www.arenadigital.capital

Arena Digital Capital Management was founded in January 2022 by three experienced traditional finance hedge fund professionals who have been deploying personal capital in the digital asset ecosystem since 2018. The team has managed billions of dollars of capital for high net worth individuals, family offices, and institutions ranging from pension plans and endowments to sovereign wealth funds. We have worked closely with institutional consultants, RIAs, and other advisors in serving their clients.

In May 2022 we launched Arena Digital Capital Partners, with the goal of providing a multi-strategy investment vehicle to access the digital asset ecosystem. Our mandate is to offer broad exposure across the growing digital asset and blockchain sector with an appropriate level of diversification, professional oversight, and manager selection. Our collection of skill sets and our history in the business allows us to understand, assess, and engage with the practitioners of this nascent asset class with a level of diligence required to be responsible stewards of capital. We are happy to periodically share our observations with you.

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