Morgan Stanley Just Launched Crypto Trading And Undercut Coinbase, Schwab, And Robinhood

Wall Street just walked into crypto's home turf and undercut everyone in the room. Morgan Stanley's E*Trade is rolling out crypto trading at a fee that beats every major rival.

The pilot, announced May 6, will let E*Trade customers buy and sell Bitcoin, Ether, and Solana directly inside their existing brokerage account.

The Pricing Play

Morgan Stanley is charging 0.50% on the dollar value of each crypto trade, which is the cheapest sticker price among the major U.S. platforms.

Coinbase starts at 60 basis points, Schwab is at 75, and Robinhood starts at 95.

A basis point is one one-hundredth of a percent, so 50 basis points means $5 in fees on every $1,000 traded. On a $10,000 trade, the gap between Morgan Stanley and Robinhood is $45 - real money for the average retail trader.

Eric Balchunas, an ETF analyst at Bloomberg, said the move could push fees lower across the entire industry, which is exactly the kind of price war Coinbase has spent years trying to avoid.

A Threat To Pure-Play Crypto

Coinbase has been the default place for U.S. retail investors to buy crypto for years.

Now its biggest customers - people who already have a brokerage account somewhere - have a cheaper option that lives next to their stocks and ETFs.

Morgan Stanley is also working with Zerohash, a digital asset infrastructure firm, which handles custody and settlement so the bank doesn't have to build its own crypto plumbing.

The strategy fits the wider Morgan Stanley playbook, since the firm makes most of its money from wealth management and has already been one of the first big banks to give clients access to Bitcoin ETFs.

What To Watch

The pilot is starting with three coins, and all 8.6 million E*Trade clients are set to get access later this year. Morgan Stanley has hinted at adding more tokens and tokenized assets in future phases.

When Wall Street competes on price, the rest of the industry usually has to follow.