Morgan Stanley Raises Bet on Digital Assets With E*Trade Crypto Access

I trade, you trade, E*Trade.

Financial services industry giant Morgan Stanley announced last week that some clients can now buy, sell and hold the cryptocurrencies bitcoin, sol and ether via E*Trade, its self-directed brokerage. They can also view them alongside their stock and ETF purchases. The move is the latest indication that traditional financial institutions are viewing crypto less as a passing trend and more as a permanent part of the investment landscape. The decision was “inevitable,” given crypto’s momentum, said Tyrone Ross, CEO of 401 Financial and Turnqey Labs, even amid the ongoing bitcoin slump.

“It’s a sign of the times,” Ross said. “This is also happening in the depths of a bitcoin and crypto bear market. That part of it is really interesting.”

The Crypto Keeper

Although wirehouses have been slower to incorporate crypto into their mainstream offerings, Morgan Stanley has been at the forefront of tech adoption, Ross said. In April, the firm launched its own spot bitcoin fund, the Morgan Stanley Bitcoin Trust, which overtook the WisdomTree Bitcoin Fund in terms of total net inflows after about a week of trading. But they’re still “woefully behind” the broader crypto industry, he added. As far as transfer capabilities go, the remaining hurdle isn’t so much regulatory as technical, added Roxanna Islam, head of sector and industry research at TMX VettaFi. “Buying and selling crypto is relatively straightforward, but allowing crypto assets to move to and from external accounts introduces significantly more operational and compliance risk,” she said.

Other firms have recently made moves in the crypto space too:

• In April, Charles Schwab announced its new crypto trading platform, Schwab Crypto.
• In February, Fidelity introduced a stablecoin, the Fidelity Digital Dollar Stablecoin (FIDD), meant for trading on its crypto platform.

On the Uptake. The largest uptake will likely come from Morgan Stanley advisors and their clients rather than from average retail investors, who may instead continue to turn to platforms like Robinhood or Coinbase. That could be especially true given E*Trade’s 50-basis-point fee on every transaction. Ross said a majority of the usage wave will “come from the [Morgan Stanley] advisor saying: ‘Go do it at E*Trade. I have no desire to deal with it. Go do it on your own.’”