Two of the country's two leading Wall Street brokerages plan to introduce a wider range of customers to digital assets, indicating a shift in the financial industry’s approach to cryptocurrency.
Charles Schwab Corp. said it has plans similar to its competitor to integrate crypto trading options for its customer base. This follows a broader movement towards incorporating digital assets into mainstream finance.
Morgan Stanley is preparing to let clients trade Bitcoin and Ether through its E*Trade platform starting next year, Bloomberg reports. The brokerage already offers crypto exposure through products like ETFs to wealthy clients but intends to allow everyday investors direct access.
This marks a departure from previous years when large financial institutions often limited engagement with or avoided crypto assets entirely.
This shift follows the recent withdrawal of regulatory guidance from 2023. U.S. banking regulators had previously warned traditional financial institutions of risks associated with crypto-assets held on open, public networks.
The Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation jointly issued that warning. They withdrew the guidance last week, stating this was in part "to further support innovation in the banking system."
The move also aligns with a change in posture from the current administration towards the crypto industry. The administration has reversed previous policies and taken steps to support the sector, including withdrawing regulatory actions against firms like Coinbase, where cases have been dropped.
The increased competition from large brokerages prompted a market reaction, with Robinhood Markets shares fell after the report of Morgan Stanley's plans emerged. Robinhood also reported higher expected expenses in its first-quarter earnings report.
The embrace of crypto by major financial firms reflects a view held by some that the traditional banking system is lagging behind digital finance.
"I’m telling you, if the banks don’t watch what’s coming, they’re going to be extinct in 10 years," said Eric Trump, executive vice president of the Trump Organization.
