Key insights
- Morgan Stanley's ETrade is launching crypto trading with lower fees, increasing competitive pressure on Coinbase. This move signals traditional finance's growing interest in crypto, potentially impacting Coinbase's market share and profitability. The stock pared gains following the news, reflecting investor concerns about increased competition in the crypto exchange space.
Investing.com -- Coinbase Global Inc. (NASDAQ:COIN) shares trimmed earlier gains Wednesday morning following a Bloomberg report that Morgan Stanley is launching cryptocurrency trading on its ETrade platform with lower fees than competitors.
The stock was up 1.4% amid broader equity market strength, but well off session highs after the report. Morgan Stanley is charging clients 50 basis points on the dollar value of each crypto transaction, undercutting Coinbase as well as Robinhood Markets Inc. and Charles Schwab Corp.
The offering is currently in pilot mode, with all of ETrade’s 8.6 million clients set to gain access later this year, according to the report. Morgan Stanley’s pricing strategy represents a direct challenge to Coinbase, the largest crypto exchange in the U.S.
The Wall Street bank’s move marks its latest effort to expand market share in cryptocurrency trading, an asset class that was largely off-limits for traditional banks until recently. The firm is building out crypto-related offerings across its business lines as it anticipates convergence between traditional finance and decentralized finance.
"This is much bigger than trading crypto at a cheaper rate," Jed Finn, Morgan Stanley’s head of wealth management, said in the Bloomberg interview. "In a way, the strategy is disintermediating the disintermediators."
The development adds competitive pressure to Coinbase’s core exchange business as major financial institutions enter the cryptocurrency trading space with potentially more attractive pricing for retail investors.
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