Main Points:
- Morgan Stanley is planning to launch direct trading of leading cryptocurrencies—Bitcoin and Ethereum—on its E*Trade platform as soon as 2026, through partnerships with established crypto firms.
- U.S. regulators are removing prior‑approval hurdles: the FDIC’s new FIL‑7‑2025 and recent FDIC policy changes now allow banks to engage in crypto activities without special permission.
- Traditional brokerages are responding: Charles Schwab aims to introduce spot crypto trading within 12 months, and SoFi has announced plans to re‑enter the crypto market by late 2025.
- Industry voices, notably Eric Trump, warn that banks ignoring blockchain and DeFi risk obsolescence within a decade.
- Mainstream bank entry is poised to broaden retail access, intensify competition with crypto‑native exchanges, and catalyze institutional adoption.
Morgan Stanley’s Crypto Ambitions
Morgan Stanley, one of Wall Street’s preeminent investment banks, is reportedly in early‑stage discussions to integrate direct cryptocurrency trading into its ETrade retail platform. According to Bloomberg, the initiative envisions allowing ETrade clients to buy and sell Bitcoin (BTC) and Ethereum (ETH) directly from their brokerage accounts, rather than through intermediary ETFs or trusts. Internally, the bank is evaluating partnerships with regulated crypto‑service providers to construct a secure custody and execution framework, targeting a launch window in 2026. This would mark Morgan Stanley’s most significant foray into spot crypto markets, expanding beyond its 2021 high‑net‑worth Bitcoin fund that remains inaccessible to general investors.
Regulatory Winds Shift
The timing of Morgan Stanley’s plan coincides with a pronounced shift in U.S. financial regulation under the current administration. In February 2025, the FDIC issued FIL‑7‑2025, rescinding its 2022 guidance that required banks to obtain prior approval before engaging in crypto activities. Similarly, the Office of the Comptroller of the Currency (OCC) and the Federal Reserve have withdrawn or softened earlier supervisory letters, smoothing the path for banks to offer custody, trading, and blockchain network services under standard oversight regimes. At the Securities and Exchange Commission (SEC), enforcement against crypto issuers has eased compared to the previous administration, reducing legal uncertainty for institutions considering on‑balance‑sheet crypto holdings.
Traditional Banks Reengage
Morgan Stanley is not alone. Charles Schwab’s CEO Rick Wurster has publicly committed to launching spot Bitcoin and Ethereum trading on Schwab’s platform within the next 12 months, citing robust client demand for digital assets. In his May 2025 earnings call, Wurster underscored Schwab’s need to diversify product offerings and capture a growing cohort of retail investors attracted to crypto’s return potential. Likewise, fintech firm SoFi, which paused direct crypto services in 2023 amid regulatory scrutiny, announced plans to re‑enter the market by year‑end, pointing to improved clarity from regulators as the primary catalyst. These moves signal a striking reversal from 2022–2023, when banks largely retreated from digital‑asset ventures.
Voices Propelling Change
Beyond regulatory and competitive factors, thought leaders within the Trump family have amplified the urgency for banks to adapt. Eric Trump warned on CNBC that traditional banks failing to embrace blockchain and decentralized finance (DeFi) could “evaporate within 10 years,” likening crypto adoption to internet banking’s disruptive impact. His comments resonate with broader industry sentiment: a Deloitte survey published in April 2025 found 68% of U.S. banking executives view crypto trading as likely to become a core service by 2028. This groundswell of support from influential voices is pressuring legacy institutions to overcome technological and compliance hurdles swiftly.
Market Implications
Should Morgan Stanley and its peers follow through, retail access to cryptocurrencies could expand dramatically. E*Trade’s 5 million+ brokerage accounts represent a sizeable addressable market that has previously relied on ETFs, trusts, and futures to gain crypto exposure. Direct trading capabilities promise tighter spreads, lower fees, and real‑time settlement, eroding competitive advantages held by native platforms like Coinbase and Binance.US. Institutional interest may follow: banks offering custody and prime‑broker services could attract hedge funds and family offices seeking regulated venues for digital assets. Moreover, mainstream endorsement of crypto trading is likely to spur further innovation in on‑chain analytics, compliance tooling, and tokenized asset offerings.
Conclusion
Morgan Stanley’s exploration of spot crypto trading on E*Trade epitomizes the convergence of regulatory easing, competitive dynamics, and strategic foresight driving traditional finance toward digital assets. As the FDIC, OCC, and Fed dismantle approval barriers, and as peers like Schwab and SoFi commit to crypto rollouts, a new era of bank‑sponsored digital‑asset services is dawning. For retail investors, this heralds easier, safer access to Bitcoin and Ethereum; for banks, it presents both an opportunity to capture emerging revenue streams and a risk—to be left behind if they fail to innovate. The next 12–18 months will be critical: banks that move decisively may redefine mainstream finance, while those that hesitate may find themselves disrupted by more agile, crypto‑native competitors.
