Morgan Stanley Considers Adding Cryptocurrency to E-Trade Platform

In a significant development that could potentially shake up the cryptocurrency trading landscape, Morgan Stanley, one of the world’s largest asset managers, is reportedly considering adding cryptocurrency trading to its E-Trade online brokerage platform. This news was first reported by The Information on January 2nd.

Regulatory Environment: A Key Consideration

According to the report, Morgan Stanley cited expectations of a friendlier crypto regulatory environment under United States President-elect Donald Trump as a key consideration in their decision-making process. Trump has promised to appoint industry-friendly leaders to key regulatory agencies and make the US "the world’s crypto capital." This favorable outlook could create an attractive opportunity for traditional retail brokerages like E-Trade to enter the cryptocurrency trading market.

E-Trade: A Potential Game-Changer

If Morgan Stanley decides to add cryptocurrency trading to its E-Trade platform, it would make E-Trade one of the biggest traditional retail brokerages to support crypto trading. With 5.2 million accounts collectively holding approximately $360 billion, E-Trade could bring cryptocurrency trading to millions of investors who may not have had access to this market previously. This move has the potential to create meaningful competition for incumbent platforms like Coinbase.

Morgan Stanley’s Early Mover Advantage

Morgan Stanley has been an early mover in crypto compared with other traditional wealth managers. In August, Morgan Stanley authorized its 15,000 financial advisors to start recommending Bitcoin (BTC) exchange-traded funds (ETFs) to clients. As one of the largest wealth managers in the US, Morgan Stanley’s advisory network manages some $3.75 trillion, including $1 trillion in self-directed client accounts. Their advisors have been recommending widely considered "blue chip" ETFs such as BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC).

Crypto Trading on Traditional Platforms

Other traditional retail brokerages offering crypto trading include Robinhood, Fidelity, and Interactive Brokers. Charles Schwab reportedly plans to add crypto trading this year, according to Bloomberg. While available tokens on these platforms are generally more limited than on crypto-native centralized exchanges like Coinbase, they have still been a lucrative business for online brokerages.

The Rise of Crypto Trading

Crypto trading has been a rapidly growing area, and traditional retail brokerages have been eager to tap into this market. Robinhood’s Q3 2024 results show that crypto trading volume and revenue soared by 112% and 165% year-on-year, coming to $14.4 billion and $61 million, respectively. Coinbase clocked revenues of $1.2 billion in the third quarter of 2024, primarily from its crypto trading businesses.

The Acquisition of Bitstamp

In June, Robinhood agreed to acquire the Bitstamp crypto exchange in a $200 million deal that would enable it to serve institutional investors in the United States. This acquisition demonstrates the increasing interest in cryptocurrency trading among traditional retail brokerages and their desire to expand their offerings to include more tokens.

The Future of Crypto Trading

The addition of cryptocurrency trading to E-Trade could potentially create a new era of competition in the market, driving down fees, improving accessibility, and increasing adoption. As traditional retail brokerages continue to enter the crypto space, it will be interesting to see how they differentiate themselves from incumbent platforms like Coinbase.

Conclusion

Morgan Stanley’s consideration of adding cryptocurrency trading to its E-Trade platform is a significant development in the ongoing evolution of the cryptocurrency market. With a potential regulatory environment that could be more favorable to industry players and a growing demand for crypto trading, this move has the potential to shake up the market and bring new opportunities for investors.

Additional Insights

• The Impact on Coinbase: The addition of cryptocurrency trading to E-Trade could potentially create meaningful competition for incumbent platforms like Coinbase.
• Regulatory Environment: The appointment of industry-friendly leaders to key regulatory agencies and a favorable outlook from President-elect Trump could create an attractive opportunity for traditional retail brokerages to enter the cryptocurrency market.
• Investor Access: E-Trade’s 5.2 million accounts collectively holding approximately $360 billion could bring cryptocurrency trading to millions of investors who may not have had access to this market previously.

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• Brokerages embrace crypto: Learn more about traditional retail brokerages entering the crypto space and their potential impact on the market.