Why the TradFi takeover of crypto might not be the death blow analysts expect
Gate’s CBO argues that Bloomberg’s warning of a TradFi takeover is “oversimplified,” noting that global exchanges evolved past fee-only models years ago.
What to know:
- Morgan Stanley is launching crypto trading on its E*Trade platform with a 50-basis-point fee, undercutting rivals like Coinbase, Robinhood and Schwab and intensifying a price war in digital-asset trading.
- Traditional finance analysts say the move could sharply compress margins for U.S. crypto exchanges, while crypto-native executives argue that global platforms have already diversified beyond spot-trading fees.
- Industry leaders see Morgan Stanley’s entry as both a competitive threat to U.S. exchanges and a positive step for mainstream crypto adoption, likely pushing exchanges further into derivatives, DeFi and international markets.
The battle for cheap crypto trading resembles the trading fee race when spot ETFs launched in 2024, which saw providers begin high, offering 50 basis points before Morgan Stanley undercut them all with a 14 basis point offering.
In the long run, this means that trading crypto will be cheaper, where the clear winners will be retail traders, while crypto exchanges see their margins significantly trimmed, potentially affecting the likes of Coinbase, who recently cited financial issues as a reason for to reduce its workforce by 14%.
When 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 is disintermediating the disintermediators.” He added: “It’s going to be very competitive in the next couple of years,” explaining the move is aimed at ensuring its 8.6 million clients remain within its banking system instead of resorting to other platforms as the demand for crypto increases.
