Report Emerges of Plans to Introduce Crypto Trading to Millions of Investors
According to a recent report by The Information, Morgan Stanley, one of the world’s largest asset managers, is considering adding cryptocurrency trading to its E-Trade online brokerage platform. This move would make E-Trade one of the biggest traditional retail brokerages to support crypto trading, potentially creating meaningful competition for incumbent platforms like Coinbase.
Regulatory Environment Seen as Favorable Under Trump Administration
Morgan Stanley reportedly 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 favorable outlook is seen as a significant factor in Morgan Stanley’s decision to explore adding cryptocurrency trading to its platform.
E-Trade’s Large User Base Could Bring Crypto to Millions of Investors
Morgan Stanley acquired E-Trade in 2020, and the brokerage’s 5.2 million accounts collectively hold approximately $360 billion, according to The Information. If E-Trade were to add support for crypto trading, it could bring cryptocurrency investing to millions of investors who may not have previously had access to this market.
Growing Interest in Crypto Trading Among Traditional Brokerages
Other traditional retail brokerages, such as Robinhood, Fidelity, and Interactive Brokers, are also exploring or have already added crypto trading to their platforms. Charles Schwab reportedly plans to add crypto trading this year, according to Bloomberg. While available tokens on these platforms may be more limited than those found on crypto-native centralized exchanges like Coinbase, they still offer a significant opportunity for investors to gain exposure to the cryptocurrency market.
Crypto Trading Has Been a Lucrative Business for Online Brokerages
Robinhood’s Q3 2024 results show that crypto trading volume and revenue soared by 112% and 165% year-on-year, respectively. This growth in popularity is driven by the increasing demand for cryptocurrencies among investors. Robinhood has also agreed to acquire the Bitstamp exchange in a $200 million deal, which would enable it to serve institutional investors in the United States.
Coinbase’s Revenues Reach $1.2 Billion in Q3 2024
Incumbent cryptocurrency exchanges like Coinbase have seen significant revenue growth in recent quarters. Coinbase clocked revenues of $1.2 billion in the third quarter of 2024, primarily from its crypto trading businesses. This growth is a testament to the increasing adoption and interest in cryptocurrencies among investors.
Morgan Stanley’s Early Mover Advantage
Morgan Stanley has been an earlier mover in cryptocurrency 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 by 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 exchange-traded funds. This move demonstrates the increasing acceptance of cryptocurrencies among traditional financial institutions.
Implications of Morgan Stanley’s Potential Entry into Crypto Trading
If Morgan Stanley were to add support for cryptocurrency trading on its E-Trade platform, it could have significant implications for the market. The entry of a major traditional retail brokerage like E-Trade would create meaningful competition for incumbent platforms and potentially drive further growth in adoption and interest in cryptocurrencies.
Conclusion
Morgan Stanley’s consideration of adding cryptocurrency trading to its E-Trade platform marks an important step in the increasing acceptance and adoption of cryptocurrencies among traditional financial institutions. The potential entry of a major brokerage like E-Trade could have significant implications for the market, driving further growth in adoption and interest in cryptocurrencies.
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