In a significant move that could disrupt the traditional retail brokerage 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 decision, if implemented, would make E-Trade one of the biggest traditional retail brokerages to support crypto trading.
Friendlier Crypto Regulatory Environment Under Trump
According to a Jan. 2 report by The Information, Morgan Stanley’s consideration of adding cryptocurrency trading to its E-Trade platform is driven in part by expectations of a friendlier crypto regulatory environment under United States President-elect Donald Trump. 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 significant boost to the adoption of cryptocurrencies, making it easier for traditional financial institutions to integrate them into their services.
E-Trade’s Massive User Base
With 5.2 million accounts collectively holding approximately $360 billion, E-Trade would bring cryptocurrency trading to millions of investors if it decides to add support for crypto trading. This vast user base could help drive the adoption of cryptocurrencies and provide a significant competitive advantage to Morgan Stanley.
Competing with Incumbent Platforms
The addition of cryptocurrency trading to E-Trade’s platform could create meaningful competition for incumbent platforms, such as Coinbase. Other traditional retail brokerages, including Robinhood, Fidelity, and Interactive Brokers, have already begun to offer crypto trading services.
Growing Demand for Crypto Trading
Crypto trading has been a lucrative business for online brokerages, with many companies reporting significant revenue growth in recent quarters. For example, Robinhood’s Q3 2024 results showed that crypto trading volume and revenue soared by 112% and 165%, respectively, coming to $14.4 billion and $61 million.
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 advisers to start recommending Bitcoin exchange-traded funds (ETFs) to clients, a move that demonstrates its commitment to embracing cryptocurrency.
With $3.75 trillion in assets under management, including $1 trillion in self-directed client accounts, Morgan Stanley’s advisory network has significant influence over the investment decisions of its clients. By recommending established and reputable crypto ETFs such as BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC), Morgan Stanley is helping to drive adoption and increase confidence in cryptocurrency.
The Future of Crypto Trading
As more traditional financial institutions begin to offer crypto trading services
