Morgan Stanley is considering adding cryptocurrency trading to its E*TRADE platform for 5.2 million retail customers. This decision comes amidst expectations of a more favorable regulatory environment for cryptocurrencies.
A New Era of Digital Asset Integration
The decision to offer cryptocurrency trading services could position E*TRADE as one of the largest traditional financial platforms to enter the crypto space. Acquired by Morgan Stanley in 2020 for $13 billion, E*TRADE has established itself as a leading platform for stocks, mutual funds, ETFs, and other investment products. Morgan Stanley has already taken steps to integrate cryptocurrency into its wealth management services by authorizing 15,000 of its financial advisers to recommend Bitcoin ETFs to clients.
Why Cryptocurrency Trading?
The cryptocurrency market has surged in recent years, with Bitcoin and Ethereum leading the charge. As of January 3, 2025, the total market valuation of cryptocurrencies exceeds $3.4 trillion. Digital assets have attracted both institutional and retail investors as a hedge against inflation and fiat currency devaluation. Companies like MicroStrategy have purchased significant amounts of Bitcoin, driving up their stock values.
The Shift in Regulation and Market Demand
E*TRADE's interest in expanding into crypto trading reportedly reflects two primary factors: a potential shift in the U.S. regulatory framework and increasing market demand. Under the Trump administration, there are expectations for more favorable crypto regulations, which could lower the barriers for financial institutions to enter the space. Additionally, retail investors are becoming increasingly interested in cryptocurrency as a viable investment option. For instance, Robinhood has seen massive growth in its crypto trading volume, with a 112% year-on-year increase in Q3 2024. Morgan Stanley's exploration into this market comes as part of a broader strategy to position itself as a leader in the cryptocurrency space.
The potential launch of cryptocurrency trading on E*TRADE will pose significant competition to established players such as Coinbase. With Morgan Stanley's reputation and regulatory backing, the platform would have a considerable edge in attracting customers looking for a more traditional investment platform with the added benefit of cryptocurrency services.
