Immediately after Morgan Stanley announced the rollout of E*Trade, charging just 50 basis points, undercutting established rivals Coinbase, Robinhood and Schwab, Bloomberg analyst Eric Balchunas said “crypto exchanges should be scared.”
Others have been less direct, saying the Wall Street giant is “not entering crypto to complement Coinbase, but to replace it…”
The battle for cheap crypto trading resembles the race for trading fees when spot ETFs launched in 2024, which saw providers start high, offering 50 basis points before Morgan Stanley undercut them all with a 14 basis point offer.
In the long term, this means that crypto trading will be cheaper, and the big winners will be retail traders, while crypto exchanges will see their margins significantly reduced, which could affect companies like Coinbase, which recently cited financial problems as the reason for cutting its workforce by 14%.
When E*Trade was announced, 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 lower rate.
“In a way, strategy disintermediates the disintermediators. He added: “It’s going to be very competitive in the next couple of years,” explaining that the move is aimed at ensuring that its 8.6 million customers stay within its banking system instead of resorting to other platforms as demand for crypto grows.
In his X post last week, Balchunas echoed Finn’s sentiment, describing the Wall Street giant’s decision as a “SHOT SHOT” moment. “Morgan Stanley is rolling out cryptocurrency trading on its E*Trade platform at 50 basis points per transaction, undercutting Schwab’s 75 basis points (which undercut Coinbase).”
He said that, based on his knowledge of how Schwab works, he “probably won’t leave this in place. Others will probably undercut as well.” He also said that “by the time the dust settles, it will be very 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 dismissed the “pessimistic” narrative as being US-centric.
“While we respect Eric Balchunas’s insights on TradFi’s advancement in crypto, the outlook seems somewhat localized to the US market and oversimplified for rapid engagements on
Lee also told CoinDesk that Balchunas’ comments do not “fully capture the mature and global evolution of the crypto industry.”
The Gate 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 the stock markets, where fierce competition naturally compresses fees,” Lee said. “Smart platforms have long evolved from fee-based models to diversified revenue streams, including staking, structured products, institutional services, and ecosystem growth.”
Georgii Verbitskii, a derivatives trader and founder of TYMIO, a non-custodial decentralized finance (DeFI) protocol, told CoinDesk that he thinks Morgan Stanley’s move into cryptocurrency trading is a good sign.
“This is clearly positive for overall crypto adoption,” Verbitskii said. “Morgan Stanley offering cryptocurrency trading to millions of brokerage users is another sign that digital assets are becoming part of traditional investment infrastructure, although the 50 basis point fee itself is not particularly competitive.”
Keneabasi Umoren, a crypto market analyst and Web3 researcher, recently told CoinDesk that he doesn’t think Wall Street would “kill exchanges, but it would reduce U.S. revenue from spot trading and custody and push exchanges further into derivatives, DeFi and global markets.”
