Morgan Stanley subsidiary looking to offer crypto trading amid regulatory optimism

Morgan Stanley’s crypto subsidiary, E-Trade, is preparing to offer crypto trading, The Information reported on Jan. 2, citing two people familiar with the plans.

According to the report, the lender’s move is motivated by its anticipation of a more favorable regulatory environment under President-elect Donald Trump’s incoming administration.

However, before launching such a service, E-Trade would need approval from key regulators, including the Federal Reserve. Its parent company is a bank holding organization, so it falls under the central bank’s oversight.

Morgan Stanley acquired E-Trade in 2020. At the time of its acquisition, it had over 5.2 million accounts and $360 billion in assets under management. 

Morgan Stanley’s entry into crypto trading would bring considerable capital and legitimacy to the space, potentially encouraging greater participation from individual and institutional investors.

Notably, Charles Schwab, the largest publicly traded brokerage in the US, has also expressed interest in crypto trading. 

In November, CEO Rick Wurster indicated that Schwab would explore the possibility if regulatory conditions improved. Like E-Trade, Schwab would require approval from the Federal Reserve due to its banking operations.

Should these firms secure the necessary approvals, the crypto market could see a wave of new entrants and heightened competition, challenging established players and bridging the gap between traditional and digital finance.

Crypto optimism in the US

The potential launch of crypto trading services by traditional finance giants highlights the mainstream interest in this sector now that regulation could become more friendly.

As Trump nominates crypto-friendly names to his team, such as the new US Securities and Exchange Commission Chairman Paul Atkins, the involvement of established institutions could reshape the competitive landscape while drawing more capital into the market.

In addition to traditional finance firms joining the crypto market, industry players hope for regulatory movements on Trump’s first day. Executive orders to make access to banking services easier are among the expectations.

Moreover, new crypto-related products could hit the markets, further increasing institutional interest. Bloomberg exchange-traded fund (ETF) analysts Eric Balchunas and James Seyffart expect a wave of approvals for new crypto ETFs this year.

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