Morgan Stanley & Schwab bring direct crypto trading to brokers
Morgan Stanley and Charles Schwab are rolling out direct crypto trading inside mainstream brokerage accounts, aiming to capture crypto demand without relying on clients trading on third-party venues.
Crypto trading distribution is the core move. The article says the firms can already “see” demand in their own client bases and that when clients execute Bitcoin spot trades elsewhere (e.g., Coinbase, Robinhood), brokerages lose both trading revenue and behavioral data.
Key numbers and context:
- Schwab clients reportedly hold about 20% of US spot crypto exchange-traded products, explaining why the rollout timing matters.
- Morgan Stanley’s E*Trade channel serves 8.6 million self-directed clients and generated about 1.029 million average daily revenue trades in 2025 through a channel holding $1.67T in assets.
- Schwab’s initial launch plans focus on Bitcoin (BTC) and Ethereum (ETH), with custody and execution set up via partner rails and a phased access approach.
- Regulatory clarity in 2025–2026 is cited as enabling the buildout, including FDIC and OCC shifts, plus SEC staff interim guidance on broker-dealer registration for some crypto interfaces.
Why now:
- App-based brokers have shown weaker crypto activity during the recent slowdown (Robinhood’s crypto notional volume and revenue fell year over year), so incumbents are using “quiet time” to harden compliance, pricing, and service workflows.
What to watch for traders:
- If crypto trading becomes a routine brokerage feature and ETF inflows keep recovering, these platforms could increase BTC/ETH demand and improve liquidity.
- The upside is stronger if Schwab expands transfer capability and beyond BTC/ETH quickly. The downside is adoption staying limited if transfers are constrained by state rules or broader policy stalls (e.g., CLARITY Act momentum).
Bullish
This is bullish for crypto markets because brokerages moving crypto trading into their own accounts reduces customer “friction” and can convert ETF-driven interest into ongoing, recurring spot trading activity for BTC and ETH.
The key mechanism is distribution and retention. Similar moves in past market cycles—when banks/brokerages add regulated crypto rails—tend to expand the addressable investor base over time. Even if near-term flows don’t surge immediately, adding custody/execution inside familiar interfaces typically supports steadier demand and tighter liquidity conditions as trading becomes “routine.”
Short-term impact: modest positive bias. Initial rollout is limited (BTC/ETH first, phased access, and possible transfer constraints in certain regions). That means traders may see incremental support rather than an explosive demand shock.
Long-term impact: more constructive. If regulatory pathways continue to open (FDIC/OCC/SEC guidance cited) and the CLARITY Act debate doesn’t derail access, the brokerage channel can become a durable “table-stakes” feature. That can:
- Increase the probability of sustained spot volumes for BTC/ETH,
- Improve market stability via deeper liquidity,
- Reduce reliance on pure-play exchanges for retail engagement.
Main risks (bearish offsets): adoption could remain constrained if transfers are delayed or if policy momentum stalls, leading to retention of existing crypto-curious users without materially expanding new account growth.