Immediately after Morgan Stanley announced it was launching E*Trade, charging just 50 basis points, undercutting established rivals Coinbase, Robinhood and Schwab, Bloomberg analyst Eric Balchunas said “cryptocurrency exchanges should be afraid.”
Others were less direct, saying the Wall Street giant “isn’t entering cryptocurrencies to complement Coinbase, it’s entering to replace them…”
The battle for cheap cryptocurrency trading resembles the race for trading fees when spot ETFs launched in 2024, in which providers started with high prices, offering 50 basis points before Morgan Stanley undercut them all with a 14 basis point offer.
In the long term, this means that cryptocurrency trading will become cheaper, with the clear winners being retail traders, while cryptocurrency exchanges will see their margins significantly cut, which could impact companies like Coinbase, which recently cited financial issues as a reason for reducing its workforce by 14%.
In announcing E*Trade, Jed Finn, head of wealth management at Morgan Stanley, suggested the move was more about dominance than control. “This is much more important than trading cryptocurrencies at a cheaper price.
“In a way, the strategy is to disintermediate the disintermediators.” He added: “It’s going to be very competitive in the coming years,” explaining that the move is aimed at ensuring that its 8.6 million customers remain within its banking system rather than turning to other platforms as demand for cryptocurrencies increases.
In his X post last week, Balchunas echoed Finn’s sentiment, framing the Wall Street giant’s move as a “SHOT” moment. “Morgan Stanley is rolling out cryptocurrency trading on its E*Trade platform at 50 basis points per trade, undercutting Schwab’s 75 basis points (which undercuts Coinbase).”
He said that based on his knowledge of how Schwab works, he “probably won’t let this continue. Others will probably undermine him as well.” He also said that “by the time everything settles down, it will be pretty cheap to trade cryptocurrencies everywhere.” Before concluding by saying “this is why TradFi (traditional financial) is no joke and crypto exchanges should be afraid.”
However, crypto-native leaders rejected the “doom and gloom” narrative as US-centric.
“While we respect Eric Balchunas’ thoughts on TradFi’s push into cryptocurrencies, the outlook seems somewhat localized to the US market and oversimplified for quick commitments on
Lee also told CoinDesk that Balchunas’ comments do not “fully capture the global and mature evolution of the crypto industry.”
Gate’s CBO explained that recent moves by Wall Street giants to reduce spot trading fees reflect the continued reduction in commissions that is normal to see when competition intensifies.
“This reflects long-established patterns in securities markets, where fierce competition naturally compresses rates,” Lee said. “Smart platforms long ago moved from payment models to diversified revenue streams that include staking, structured products, institutional services and ecosystem growth.”
Georgii Verbitskii, derivatives trader and founder of TYMIO, a non-custodial decentralized finance (DeFI) protocol, told CoinDesk that he believes Morgan Stanley’s move into cryptocurrency trading is a good sign.
“This is clearly positive for cryptocurrency adoption in general,” Verbitskii said. “Morgan Stanley bringing cryptocurrency trading to millions of brokerage users is another sign that digital assets are becoming part of the mainstream investment infrastructure, although the 50bp fee itself is not especially competitive.”
Keneabasi Umoren, a cryptocurrency market analyst and researcher at Web3, recently told CoinDesk that he doesn’t think Wall Street will “kill exchanges, but it will squeeze US spot trading and custody revenues and push exchanges into derivatives, DeFi, and global markets.”
