Immediately after Morgan Stanley announced it was rolling out E*Trade, which charges just 50 basis points, undercutting established rivals Coinbase, Robinhood and Schwab, Bloomberg analyst Eric Balchunas said “crypto exchanges should be scared.”
Others were less blunt, saying the Wall Street giant “isn’t getting into crypto to complement Coinbase — it’s getting into replacing it…”
The battle for cheap crypto trading is similar to the trading fee race when spot ETFs launched in 2024, with providers starting high, offering 50 basis points, before Morgan Stanley undercut them all with a 14 basis point offer.
In the long run, this means trading crypto will become cheaper, with the clear winners being retailers, while crypto exchanges see their margins significantly trimmed, potentially affecting the likes of Coinbase, which recently cited financial woes as a reason to reduce its workforce by 14%.
In announcing E*Trade, Jed Finn, Morgan Stanley’s head of wealth management, suggested the move was more about dominance than control. “This is much bigger than trading crypto at a cheaper rate.
“In a way, the strategy cuts out the disintermediaries.” He added: “It will be very competitive for the next few years,” explaining the move is aimed at ensuring its 8.6 million customers remain in its banking system rather than resorting to other platforms as demand for crypto rises.
In his X post last week, Balchunas echoed Finn’s sentiments, framing the Wall Street giant’s move as a “SHOTS FIRED” moment. “Morgan Stanley rolls out crypto trading on its E*Trade platform at 50bps per trade, undercutting Schwab’s 75bps (which undercuts Coinbase).”
He said that based on his knowledge of how Schwab operates, it “probably won’t let this stand. Others will probably undercut as well.” He also said that “when the dust settles, it will be pretty cheap to trade crypto anywhere.” Before I conclude by saying “this is why (traditional financial) TradFi is no joke and crypto exchanges should be afraid.”
However, crypto-native leaders rejected the “doom and gloom” narrative as US-centric.
“While we respect Eric Balchunas’ insight into TradFi’s crypto push, the perspective feels somewhat localized to the US market and oversimplified for quick engagements on X,” said Kevin Lee, Chief Business Officer at Gate, which ranks seventh on Coingecko with a 24-hour volume of nearly $2 billion.
Lee also told CoinDesk that Balchunas’ comments do not “fully capture the mature, global evolution of the crypto industry.”
The Gate CBO explained that the recent moves by the Wall Street giants to reduce spot trading fees reflect the ongoing reduction in commissions that is normal to see as competition intensifies.
“This reflects long-standing patterns in equity markets, where fierce competition naturally compresses fees,” Lee said. “Smart platforms have long since moved from fee-only models to diversified revenue streams, including stakes, structured products, institutional services and ecosystem growth.”
Georgii Verbitskii, derivatives trader and founder of TYMIO, a non-decentralized finance protocol (DeFI), told CoinDesk that he believes Morgan Stanley’s move into crypto trading is a good sign.
“This is clearly positive for crypto adoption in general,” Verbitskii said. “Morgan Stanley bringing crypto trading to millions of brokerage users is another sign that digital assets are becoming part of the mainstream investment infrastructure, even if the 50bps fee itself is not very competitive.”
Keneabasi Umoren, a crypto market analyst and Web3 researcher, recently told CoinDesk that he doesn’t believe Wall Street will “kill exchanges, but it will squeeze US spot trading and custody income and push exchanges further into derivatives, DeFi and global markets.”
