In a significant development for the cryptocurrency space, 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, this move could potentially create meaningful competition for incumbent platforms such as Coinbase.
Regulatory Environment under Donald Trump
The wealth manager has cited expectations of a friendlier crypto regulatory environment under United States President-elect Donald Trump as a key consideration. 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 stance could provide a more favorable climate for traditional retail brokerages to enter the cryptocurrency space.
E-Trade’s Significance
If Morgan Stanley goes ahead with its plans, E-Trade would become one of the biggest traditional retail brokerages to add support for crypto trading. The brokerage currently has 5.2 million accounts collectively holding approximately $360 billion in assets, according to The Information. This could potentially bring cryptocurrency trading to millions of investors.
Competition and Market Potential
The addition of E-Trade to the list of traditional retail brokerages offering crypto trading would create significant competition for incumbent platforms like Coinbase. Robinhood, Fidelity, and Interactive Brokers are already offering crypto trading services, while Charles Schwab reportedly plans to add this feature in 2025.
Crypto Trading Volumes and Revenues
The demand for cryptocurrency trading has been on the rise, with traditional retail brokerages witnessing significant growth in their crypto businesses. In its Q3 2024 results, Robinhood reported that crypto trading volume and revenue soared by 112% and 165% year-on-year, respectively, reaching $14.4 billion and $61 million.
Early Mover Advantage
Morgan Stanley has been an early mover in the cryptocurrency space compared to other traditional wealth managers. In August, the firm authorized its 15,000 financial advisers to start recommending Bitcoin exchange-traded funds (ETFs) to clients. With a network managing some $3.75 trillion, including $1 trillion in self-directed client accounts, Morgan Stanley’s advisory network has significant influence over the market.
Recommendations and Market Share
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. This move demonstrates Morgan Stanley’s commitment to the cryptocurrency space and its willingness to provide clients with exposure to the asset class.
The Future of Cryptocurrency Trading
As traditional retail brokerages continue to enter the cryptocurrency space, it is likely that we will see increased adoption and growth in crypto trading volumes and revenues. The addition of E-Trade to the list of platforms offering crypto trading would be a significant development for the market, providing more options for investors and potentially leading to greater mainstream acceptance.
The Role of Regulatory Environment
The regulatory environment is expected to play a crucial role in shaping the future of cryptocurrency trading. With Trump’s promised changes to key regulatory agencies, it is likely that we will see a shift towards a more favorable climate for traditional retail brokerages to enter the space.
Conclusion
Morgan Stanley’s consideration of adding cryptocurrency trading to its E-Trade platform is a significant development for the market. The potential addition of E-Trade to the list of platforms offering crypto trading could create meaningful competition for incumbent platforms and provide more options for investors.
References
- 2025 will be crypto’s best year ever — Steno Research
- Brokerages Embrace Crypto
- Charles Schwab to add cryptocurrency trading in 2025, according to Bloomberg
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