Morgan Stanley is moving ahead with plans to introduce direct spot cryptocurrency trading on its E*Trade retail brokerage platform, according to a Bloomberg report on Thursday citing sources familiar with the matter. If executed, this would represent one of the most substantial direct digital asset retail offerings ever launched by a U.S. systemically important financial institution, signaling Wall Street's deepening embrace of crypto amid a sweeping regulatory reset.
Details and Timeline
The feature is still under development and could launch as early as 2026, the report said. It would allow E*Trade clients to trade leading digital assets directly, including bitcoin and ether. Morgan Stanley executives are currently evaluating the necessary infrastructure and considering partnerships with established crypto-native firms. Until now, E*Trade's exposure to crypto has been limited to derivatives and public equity vehicles such as CME bitcoin futures, spot and futures-based exchange-traded funds (ETFs), and crypto asset trusts. These instruments provide only indirect price exposure and do not support physical settlement or on-chain custody.
Regulatory Shift: From Obstruction to Embrace
The timing of this move aligns with a dramatic change in U.S. macro policy under the Trump administration. In early 2025, the U.S. Securities and Exchange Commission (SEC) repealed Staff Accounting Bulletin No. 121 (SAB 121), removing capital constraints that had discouraged banks from custodial engagement with crypto. Simultaneously, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) rescinded prior guidance on digital assets, effectively allowing traditional finance to re-enter the sector with greater flexibility.
More boldly, in March 2025, the administration established a U.S. Strategic Bitcoin Reserve via executive order, consolidating bitcoin seized through federal enforcement actions. A parallel directive created a Digital Asset Stockpile under Treasury oversight for non-bitcoin tokens such as ether, Solana, XRP, and Cardano. The administration also replaced multiple agency heads with deregulatory appointees, including Paul S. Atkins as SEC chair, and moved to terminate ongoing enforcement actions against Coinbase, Ripple, and others. Critics warn that such rapid deregulation heightens systemic risk and opens the door to regulatory capture.
Market Impact and Divergent Views
Market participants have reacted positively to the news, seeing it as a natural evolution as Wall Street moves from indirect exposure to direct participation. If E*Trade successfully integrates spot crypto trading, it could compete head-to-head with native crypto exchanges like Coinbase on execution quality and fee structures. Industry observers note that this step would bring digital assets into the mainstream for millions of existing E*Trade retail investors.
However, the plan has also drawn skepticism from risk management experts. They argue that systemically important banks venturing into the volatile retail crypto space could amplify financial contagion. The debate underscores a broader polarization: while the regulatory pendulum swings toward permissionless innovation, calls for investor protection remain loud. As of press time, Morgan Stanley has not issued an official statement, but sources indicate internal evaluations are at an advanced stage. This development reinforces the narrative that cryptocurrency is no longer a fringe asset—it is becoming a core component of traditional finance infrastructure.