Morgan Stanley has begun offering spot cryptocurrency trading on its E*Trade retail brokerage platform, accelerating the bank's foray into digital asset products and services for its retail client base.

The sixth-largest U.S. bank by assets under management is charging clients 50 basis points on the dollar value of each crypto transaction. The pilot is live now, with all of E*Trade's 8.6 million clients expected to gain access later this year, Bloomberg reported on Wednesday.

Jed Finn, head of wealth management at Morgan Stanley, said the initiative is part of a broader strategy, adding that "this is much bigger than trading crypto at a cheaper rate," and describing the effort as "disintermediating the disintermediators."

Bloomberg senior ETF analyst Eric Balchunas said the 50-basis-point fee compares with Charles Schwab's 75 basis points, adding Schwab "likely won't let this stand." He also noted that bitcoin ETFs can trade at around 2 basis points, while direct ownership avoids fund expense ratios.

"I still think ETFs are the way bigger cash magnet at least for now," Balchunas wrote in a post on X.

The spot trading pilot represents the latest initiative from a bank that largely shunned the crypto market until this past October, when the firm said it would recommend capping crypto allocations at up to 4% in its most aggressive client portfolios. That move aligned Morgan Stanley with asset managers, including BlackRock and Fidelity.

Weeks before the E*Trade pilot, Morgan Stanley launched a low-cost spot bitcoin exchange-traded fund dubbed MSBT to meet what the bank described as "growing client interest" in crypto. The fund recorded $103 million in net inflows within its first six trading days and has since accumulated more than $205 million in assets under management, according to The Block’s data dashboard.

Beyond the latest pilot and the bitcoin ETF, Morgan Stanley is planning to allow clients to convert cryptocurrency into shares of exchange-traded products without first having to sell the digital assets, according to people familiar with the matter cited by Bloomberg. The bank also intends to add the ability to trade tokenized equities on the institutional side in the second half of this year.

Meanwhile, the bank's investment unit launched a stablecoin reserves fund last month. The fund, which the bank said is aligned with the GENIUS Act requirements, maintains a stable $1 net asset value by investing in cash and U.S. Treasury instruments with maturities of 93 days or less.