Morgan Stanley is working with the cryptocurrency infrastructure provider Zerohash to let E-Trade clients trade popular coins beginning in the first half of next year.
The firm will start with major the cryptocurrencies bitcoin, ether and solana, according to Jed Finn, Morgan Stanley head of wealth management. Allowing clients to trade coins is just "phase one," he said, adding that the firm will next seek to build a full wallet solution for clients.
"The underlying technology has been proven and blockchain-based infrastructure is obviously here to stay," Finn said in an interview. "Clients should have access to digitized assets, traditional assets and cryptocurrencies, all in the same ecosystem that they're used to."
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Morgan Stanley's partnership marks the latest in a series of efforts by big banks to make inroads in digital assets after a dramatic shift in regulatory policy when President Donald Trump took office earlier this year.
For rivals already in the market, it's been lucrative. Robinhood Markets, which has let clients trade crypto for more than a half decade, pulled in $626 million from that business last year — or 21% of its total net revenue.
"Every bank that has a trading or private wealth arm will offer crypto to their customers as a spot contract," Zerohash CEO Edward Woodford said in an interview. "In the last year they've had the clarity in order to enter the space."
Zerohash announced Tuesday that it raised $104 million in Series D funding, and is now worth $1 billion. Morgan Stanley participated in the round, which was led by Interactive Brokers Group.
Morgan Stanley plans to start an asset-allocation strategy around crypto in the coming weeks, Finn said. Its allocations will range from zero to a few percentage points of a client's portfolio, depending on their goals. The firm is also looking at broader uses for tokenization, including streamlining back-office operations such as settlement and clearing.
"If you fast-forward it to its logical extreme, the way we interact with money becomes significantly different," Finn said. For big wealth management firms, "sitting between the client and this emerging tradfi-defi divide, and simplifying the user experience" is a "massive opportunity," he said.
