Morgan Stanley, one of the largest asset management firms in the world, is reportedly considering adding cryptocurrency trading to its E-Trade online brokerage platform. According to a January 2 report from The Information, the wealth manager sees the move as a potential response to expectations of a more favorable regulatory environment under U.S. President-elect Donald Trump.
Trump has consistently promised to create a crypto-friendly regulatory atmosphere, including appointing industry-supportive leaders to key regulatory bodies and making the U.S. “the world’s crypto capital.” Should the plans materialize, E-Trade would become one of the largest traditional retail brokerages to offer crypto trading, potentially creating significant competition for established players such as Coinbase.
Morgan Stanley acquired E-Trade in 2020, and the brokerage now oversees approximately 5.2 million accounts, collectively holding around $360 billion, as reported by The Information. This expansion into crypto trading could provide E-Trade customers with the ability to trade a range of cryptocurrencies directly through their brokerage account.
Several traditional retail brokerages have already ventured into crypto trading, with Robinhood, Fidelity, and Interactive Brokers among the prominent names. Reports suggest that Charles Schwab also plans to introduce crypto trading in 2025, further signaling the industry’s mainstream shift. However, unlike crypto-native platforms such as Coinbase, these brokerages generally offer a more limited selection of cryptocurrencies.
Crypto trading has proven to be a lucrative venture for online brokerages. Robinhood’s Q3 2024 results revealed a dramatic year-on-year increase in both crypto trading volume and revenue—up by 112% and 165%, respectively—reaching $14.4 billion in volume and $61 million in revenue. Robinhood also made headlines in June when it acquired the Bitstamp crypto exchange for $200 million, a move aimed at enhancing its services for institutional investors in the U.S.
Coinbase, another industry giant, reported $1.2 billion in revenue for Q3 2024, largely driven by its crypto trading operations. These results showcase the growing significance of crypto trading within the broader financial sector and the increasing opportunities for brokerages to tap into the expanding market.
Morgan Stanley’s Early Crypto Moves
Morgan Stanley has been ahead of the curve compared to other traditional wealth managers. In August 2024, the firm authorized its 15,000 financial advisers to begin recommending Bitcoin exchange-traded funds (ETFs) to clients. As one of the largest wealth managers in the U.S., with a $3.75 trillion advisory network (including $1 trillion in self-directed accounts), Morgan Stanley’s endorsement of Bitcoin ETFs marks a significant step toward mainstreaming crypto investments.
The bank’s advisers have been recommending products like BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC)—two widely regarded “blue-chip” Bitcoin ETFs. These recommendations reflect Morgan Stanley’s proactive approach to crypto, positioning itself as a key player in the growing space.
The increasing interest from traditional financial institutions in crypto highlights the industry’s evolving nature. Many established firms are seeking ways to incorporate digital assets into their offerings, driven by investor demand and a growing sense that crypto is becoming a mainstream asset class.
For traditional brokerages, offering crypto trading or investment products like ETFs is not just a way to diversify their portfolios but also an opportunity to meet the demands of a younger, more tech-savvy clientele. As cryptocurrencies continue to gain acceptance, more brokerages are likely to follow Morgan Stanley’s lead in adapting their services to accommodate crypto investments.
The move by Morgan Stanley and other traditional brokerages into crypto trading signals a shift in the regulatory landscape. As governments and regulatory bodies worldwide look to regulate the crypto industry more comprehensively, the landscape for crypto trading platforms is becoming increasingly clear.
Should U.S. regulators continue to evolve their stance toward cryptocurrencies, more traditional financial institutions may feel empowered to enter the space. This could result in greater liquidity, transparency, and market stability, making cryptocurrencies a more attractive asset for investors across various demographics.
What The Author Thinks
While the integration of crypto into traditional financial systems is exciting, the rapid expansion should be approached with caution. Overly ambitious regulation could stifle innovation, while the lack of clear rules could leave investors exposed. Striking a balance between fostering growth and protecting investors is critical. However, there is no doubt that the continued adoption of crypto across industries is a sign of its permanence in the global financial system.
Featured image credit: FMT
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