After Morgan Stanley announced the launch of E*Trade, which charges just 50 basis points less than established rivals Coinbase, Robinhood and Schwab, Bloomberg analyst Eric Balchunas said, “Cryptocurrency exchanges should be scared.”
Others were less vocal, saying the Wall Street giant “is not entering the cryptocurrency space to complement Coinbase, but to replace it…”
The battle for cheap cryptocurrency exchanges is similar to the race for trading fees when spot ETFs were launched in 2024, when providers offered the higher price, offering 50 basis points, and then Morgan Stanley undercut all providers by 14 basis points.
In the long term, this means that cryptocurrency trading will be cheaper, with the clear winners being retail traders, while cryptocurrency exchange profit margins will plummet, which could impact companies like Coinbase, which recently cited financial issues as the reason for cutting 14% of its workforce.
Jed Finn, head of wealth management at Morgan Stanley, said when announcing E*Trade that the move was more about dominance than control. “This is much bigger than trading cryptocurrencies at cheaper prices.
“In a way, the strategy is disintermediating the disintermediators.” “It will be very competitive in the next few years,” he added, explaining that the move is aimed at ensuring its 8.6 million customers stay within its banking system rather than resorting to other platforms as demand for cryptocurrencies increases.
Balciunas echoed Finn’s sentiments in an X post last week, describing the Wall Street giant’s move as a “shoot-it-out” moment. “Morgan Stanley is launching cryptocurrency trading on its E*Trade platform at 50 basis points per trade, down from Schwab’s 75 basis points (which is lower than Coinbase).”
He said that based on what he knows about how Schwab works, it “probably won’t let this continue. Others may weaken as well.” He also said that “when the dust settles, it will become very cheap to trade cryptocurrencies anywhere.” He concluded: “This is why (traditional financial) TradFi is not a joke and crypto exchanges should be afraid.”
However, native cryptocurrency leaders dismissed the “doom and gloom” narrative, calling it US-centric.
“While we respect Eric Balchunas’ perspective on TradFi’s entry into the cryptocurrency space, this perspective feels somewhat limited to the U.S. market and is too simplistic for rapid participation on
Lee also told CoinDesk that Balchunas’ comments did not “fully capture the maturing global evolution of the crypto industry.”
Gate CBO explains that recent moves by Wall Street giants to cut spot trading fees reflect continued reductions in commissions, which is normal as competition intensifies.
“This reflects the long-term pattern of the stock market, where fierce competition will naturally compress fees,” Li said. “Smart platforms long ago moved from a fee-only model to diversifying revenue streams, including staking, structured products, institutional services and ecosystem growth.”
Georgii Verbitskii, a derivatives trader and founder of non-custodial decentralized finance (DeFI) protocol TYMIO, told CoinDesk that he believes Morgan Stanley’s move into cryptocurrency trading is a good sign.
“This is clearly positive for overall cryptocurrency adoption,” Verbitskii said. “Morgan Stanley bringing cryptocurrency trading to millions of brokerage users is another sign that digital assets are becoming part of the mainstream investment infrastructure, although the 50 basis point fee itself is not particularly competitive.”
Cryptocurrency market analyst and Web3 researcher Keneabasi Umoren recently told CoinDesk that he doesn’t think Wall Street will “kill exchanges, but squeeze U.S. spot trading and custody revenue and push exchanges further into derivatives, DeFi and global markets.”