In a move that could significantly impact the cryptocurrency industry, Morgan Stanley, one of the world’s largest asset managers, is reportedly considering adding cryptocurrency trading to its E-Trade online brokerage platform. According to a January 2 report by The Information, the wealth manager cited expectations of a friendlier crypto regulatory environment under United States President-elect Donald Trump as a key consideration.
A Changing Regulatory Landscape
Trump has promised to appoint industry-friendly leaders to key regulatory agencies and make the US "the world’s crypto capital." This shift in regulatory approach could create a more favorable environment for cryptocurrency trading, which is currently subject to strict regulations in many countries. By embracing crypto trading, Morgan Stanley would be positioning itself at the forefront of this emerging market.
E-Trade’s Potential Impact
The plans to add crypto trading capabilities to E-Trade would make it one of the biggest traditional retail brokerages to do so, potentially creating meaningful competition for incumbent platforms like Coinbase. With approximately 5.2 million accounts holding around $360 billion in collective assets, E-Trade could bring cryptocurrency trading to millions of investors who may not have previously had access to these markets.
A Growing Trend
Morgan Stanley’s consideration of adding crypto trading to its platform is part of a broader trend. Other traditional retail brokerages are also embracing cryptocurrency trading, including Robinhood, Fidelity, and Interactive Brokers. Charles Schwab reportedly plans to add crypto trading capabilities this year, according to Bloomberg.
Crypto Trading on the Rise
The growth of crypto trading on these platforms has been significant, with many recording substantial increases in revenue and trading volume. For example, Robinhood’s Q3 2024 results showed a 112% year-on-year increase in crypto trading volume and a 165% increase in crypto revenue, coming to $14.4 billion and $61 million, respectively.
Morgan Stanley’s Early Mover Advantage
Morgan Stanley has been an earlier mover in crypto compared with other traditional wealth managers. In August, the company authorized its 15,000 financial advisors to start recommending Bitcoin 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.
Recommendations from Morgan Stanley Advisers
Morgan Stanley advisers have been recommending BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC), both of which are widely considered "blue chips" among Bitcoin ETFs. These recommendations have given clients access to a regulated and liquid market for cryptocurrency investment.
The Rise of Crypto-Native Platforms
While traditional retail brokerages like E-Trade are embracing crypto trading, incumbent platforms like Coinbase continue to dominate the market with their wide range of available tokens and robust infrastructure. However, these platforms often come with more complex fees and requirements, which may deter some investors.
A Lucrative Business for Online Brokerages
The growth of crypto trading on online brokerages has been a lucrative business. Coinbase, for example, clocked revenues of $1.2 billion in the third quarter of 2024, primarily from its crypto trading businesses.
Conclusion
Morgan Stanley’s consideration of adding cryptocurrency trading to its E-Trade platform is significant, given the company’s size and influence in the wealth management industry. If successful, this move could create meaningful competition for incumbent platforms like Coinbase and potentially bring cryptocurrency trading to millions of investors who may not have previously had access to these markets.
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