Morgan Stanley is reportedly considering adding cryptocurrency trading to its E*TRADE platform. According to The Information, the investment bank is exploring plans to offer crypto services to its 5.2 million retail customers. 

This decision comes at a time when regulatory environments are expected to become more favorable for cryptocurrencies under the incoming administration of President Donald Trump.

A New Era of Digital Asset Integration

The decision to offer cryptocurrency trading services could position ETRADE as one of the largest traditional financial platforms to enter the crypto space. Acquired by Morgan Stanley in 2020 for $13 billion, ETRADE 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. In August 2024, it authorized 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 Jan. 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. As a major player in the traditional finance world, Morgan Stanley’s entry into the market could bring in a new wave of investors, both institutional and retail, eager to engage with digital assets.

Competition for Existing Crypto Platforms

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.

The entrance of such a prominent financial institution into the crypto trading market could lead to greater liquidity for digital assets and increased investor confidence. 

Worth noting, companies like Robinhood, Fidelity, and Interactive Brokers have already integrated crypto trading into their offerings, and Charles Schwab is expected to do the same in 2025.