Spot crypto trading to become ‘commoditized’ as Wall St. interest persists
As Schwab plots crypto trading upon “more clarity in the regulatory environment,” Morgan Stanley is reportedly interested too
DW labs Incorporated/Shutterstock and Adobe modified by Blockworks
This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.
Financial giants mulling ways to better serve clients clamoring for crypto is no longer surprising.
That doesn’t exactly make it any less significant, though.
First up is Morgan Stanley, which is reportedly working on adding crypto trading to its E*Trade platform (possibly next year). A spokesperson declined to comment when I requested for details.
This report — citing people familiar — doesn’t shock us, given our own reporting in recent weeks and months (even years). It’s even less surprising now, given the changing US regulatory landscape could ease burdens for TradFi players wanting to offer more crypto services.
So, if Morgan Stanley is thinking about this, will they follow through?
In a word, ZX Squared Capital co-founder CK Zheng told me: “Yes.” Particularly as they assess a market Zheng says could grow by 10x or 20x in the next decade. And, ya know, the whole thing about portfolio diversification.
Bitcoin held up better than many other risk assets during last month’s market volatility, added Zheng, an ex-valuation risk management director at (where else) Morgan Stanley. He spent nearly two decades in a similar role at Credit Suisse.
“With the ongoing tariff wars, many investors may want to diversify away from US equities, US bonds and US dollar assets,” Zheng said.
Charles Schwab, meanwhile, plans to offer spot bitcoin and ether trading within the next 12 months, CEO Rick Wurster told Reuters.
This matches what a Schwab representative told me in November, and again yesterday — that it planned to offer spot crypto trading once there’s “more clarity in the regulatory environment.”
The rep added: “We anticipate that will happen, and we’re getting ready for that eventuality.”
They didn’t immediately share with me what the company’s waiting for specifically (but I’m thinking a market structure bill, at least).
Another tidbit I heard from the Schwab spokesperson — the company in Q4 saw a 400% increase in traffic to the crypto page on Schwab.com.
In the meantime, Schwab and other brokerages (but not Vanguard) allow investors to access spot and futures crypto ETFs, as well as blockchain equity ETFs like the fund Schwab launched in mid-2022. Bitcoin and ether futures too, but only for Schwab clients with futures accounts.
You might remember that Morgan Stanley started allowing its financial advisers to offer the BlackRock and Fidelity bitcoin ETFs to certain clients. This soliciting was different from what it did before (allowing investments into such products only if clients actively sought them out).
Let’s throw another financial behemoth name in here: Wells Fargo. The bank made available unsolicited spot bitcoin ETF purchases to certain clients (via Wells Fargo Advisors or its WellsTrade platform) in early 2024.
More recently, the Wells Fargo Investment Institute called digital assets “investable as they continue to evolve” in a March report meant to address common questions.
Brian Rehling, who leads WFII’s global fixed income strategy, told me this was a response to “an increasing number of inquiries from clients and investment professionals about digital assets and if they should include allocations in their portfolios.” Most of these questions are limited to bitcoin for now, he added.
A Wells Fargo spokesperson didn’t want to comment today on any possible spot crypto trading plans — instead reiterating the ability for clients to buy bitcoin ETFs.
The proliferation of spot crypto trading on Wall Street would clearly be a milestone beyond the existing ETF access.
“Even though many investors can invest in bitcoin ETFs, spot bitcoin trading will provide easy 24/7 direct trading access with less fees,” Zheng said.
And while Coinbase and Robinhood offer this today, there would be a segment of investors that would appreciate the familiarity of traditional institution platforms — and their reputations, the exec noted.
“This will make the competition more fierce, and potentially make their services better and safer with lower transaction fees,” Zheng added. “In the end, spot trading will be a commoditized business.”
As crypto natives might say, it’s probably nothing.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
