When Brokerages Set Their Sights on Cryptocurrency Trading

"I've been having conference calls until 2 AM every day recently." The speaker, a veteran finance professional with over a decade in traditional brokerage, sits in his Beijing office, reflecting on the rapid changes reshaping the industry. Once skeptical, he now navigates the uncertain waters of virtual assets and crypto trading.

The Rise of Crypto in Traditional Brokerage

The traditional finance industry's interest in Web3 and crypto did not start in 2025. Robinhood, known for zero-commission stock trading, launched Bitcoin and Ethereum trading as early as 2018. Initially a minor feature, it became a major revenue driver years later. In Q4 2024, cryptocurrencies accounted for over 35% of Robinhood's net revenue, with trading volume surging 455% and revenue up 733% year-on-year to $358 million. By Q1 2025, crypto contributed over 27% of revenue, with trading revenue doubling to $252 million.

Robinhood quarterly cryptocurrency asset trends, source: IO.FUND

This growth was driven not by technology but by user demand. Robinhood adapted to trading habits, transforming from a centralized brokerage to a digital asset trading platform.

Traditional Finance Enters the Crypto Arena

In 2025, major traditional financial institutions began actively entering crypto markets:

• March 2025: Charles Schwab announced plans to offer spot Bitcoin trading within a year.
• May 2025: Morgan Stanley integrated BTC and ETH into its E*Trade platform for retail users.
• May 2025: JPMorgan allowed clients to purchase Bitcoin despite previous criticism.
• July 2025: Standard Chartered opened spot trading for Bitcoin and Ethereum to institutional clients.
These institutions control trillions in assets and global financial infrastructure, dwarfing the $4 trillion crypto market cap.

Mainstream asset market cap ranking, source: Steemit Community

They are building crypto trading networks based on traditional compliance frameworks, leveraging account opening authority, clearing networks, and regulatory trust—elements crypto exchanges have long lacked.

Crypto Trading Platforms Face New Challenges

An insider from a crypto trading platform shares the anxiety of competing for users, products, and traffic amid shrinking growth and external pressure. Traditional finance is encroaching on core capabilities like fiat deposits, asset custody, and spot matching. In response, many crypto platforms have launched tokenized stock products, allowing users to trade traditional assets like Apple or Tesla via USDT or on-chain contracts. Bybit was among the first to launch U.S. stock tokens, addressing trading needs during market closures or regulatory restrictions. Though still early-stage, Bybit remains optimistic about expanding crypto into traditional finance through DeFi, synthetic assets, and on-chain staking. However, tokenized stocks are often seen as defensive moves rather than growth drivers. The concept dates back to FTX in 2020, which launched tokenized stock pairs like TSLA/BTC. After FTX’s collapse, tokenized stocks shifted from innovation to a survival tactic.

XStocks trading volume vs. meme coin Ani trading volume, sources: Dune, gmgn

Despite new features, crypto exchanges struggle to attract new users, highlighting the challenge of reclaiming lost ground.

Compliance: More Than Just Licenses

Most crypto platforms emphasize compliance, applying for licenses and hiring traditional finance executives. Yet, traditional finance professionals view these efforts as superficial if platforms cannot connect to mainstream banks, clearing networks, and regulatory agencies. The traditional financial system relies on trust, transparency, risk control, and auditing—areas where crypto platforms often fall short. While some platforms like Bybit have made real progress, obtaining the European MiCA license and establishing a European headquarters in Vienna, many others remain stuck in regulatory limbo. Bitget, another platform, has secured virtual asset licenses in multiple countries and is pursuing MiCA certification to stabilize European operations. For most platforms, compliance remains a daunting barrier, and competition from traditional finance intensifies.

Navigating a New Industry Landscape

Executives across the crypto and traditional finance worlds acknowledge the rapid pace of change and the need for cautious progress. Crypto trading platforms are no longer the central players but stand at the edge of a new order shaped by larger capital and complex systems. Despite challenges, some remain optimistic. The intersection of traditional finance and crypto could lead to new opportunities in wealth management and asset allocation, creating a "romantic moment" where both worlds resonate. Yet uncertainty remains. Will regulators fully accept crypto platforms? Will traditional finance collaborate or replace them? Can crypto platforms redefine themselves before the next industry shift? For now, the industry waits—adjusting products, applying for licenses, and seeking ways to stay relevant amid the reshuffling.

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Originally published at ChainCatcher on Mon, 04 Aug 2025 12:26:52 GMT.

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Frequently Asked Questions (FAQ)

The Impact of Traditional Brokerages on Crypto Trading

Q: When did traditional brokerages start showing interest in cryptocurrency trading? A: Traditional brokerages began showing interest in cryptocurrency trading well before 2025. For instance, Robinhood launched Bitcoin and Ethereum trading as early as 2018. Q: How significant has cryptocurrency become for platforms like Robinhood? A: Cryptocurrencies became a major revenue driver for Robinhood. In Q4 2024, they accounted for over 35% of Robinhood's net revenue, with trading volume surging 455% and revenue up 733% year-on-year. Q: What factors drove the increased adoption of crypto trading on platforms like Robinhood? A: The growth was primarily driven by user demand and evolving trading habits, prompting platforms like Robinhood to adapt and transform into digital asset trading platforms. Q: Which major traditional financial institutions entered the crypto market in 2025? A: In 2025, institutions like Charles Schwab, Morgan Stanley (through its E*Trade platform), JPMorgan, and Standard Chartered began actively integrating or offering crypto trading services. Q: What advantages do traditional financial institutions bring to the crypto market? A: These institutions leverage their established compliance frameworks, account opening authority, clearing networks, and regulatory trust, which are elements often lacking in crypto-native exchanges.

Challenges and Strategies for Crypto Trading Platforms

Q: What challenges are crypto trading platforms facing due to the entry of traditional finance? A: Crypto platforms are facing increased competition for users, products, and traffic, as traditional finance encroaches on core capabilities like fiat deposits and asset custody. Q: How are crypto platforms responding to competition from traditional finance? A: Many crypto platforms have launched tokenized stock products, enabling users to trade traditional assets using cryptocurrencies. Q: What are tokenized stocks, and what is their role? A: Tokenized stocks allow users to trade traditional assets (like Apple or Tesla shares) via cryptocurrencies. While seen as a defensive move, they also aim to expand crypto's reach into traditional finance through DeFi and synthetic assets. Q: What is the main hurdle for crypto platforms regarding compliance? A: The primary hurdle is not just obtaining licenses but connecting to mainstream banks, clearing networks, and regulatory agencies, alongside building trust through transparency and robust risk control systems. Q: How are platforms like Bybit and Bitget addressing compliance? A: Bybit has obtained the European MiCA license and established a European headquarters. Bitget has secured virtual asset licenses in multiple countries and is pursuing MiCA certification.

The Future of Crypto and Traditional Finance Integration

Q: What are the potential outcomes of traditional finance entering the crypto arena? A: The intersection of these sectors could lead to new opportunities in wealth management and asset allocation, potentially creating a synergistic environment. Q: What are the key uncertainties for the future of crypto trading platforms? A: Key uncertainties include the extent of regulatory acceptance of crypto platforms, whether traditional finance will collaborate or compete, and if crypto platforms can successfully redefine themselves.

Crypto Market AI's Take

The increasing involvement of traditional financial institutions in the cryptocurrency space signifies a maturation of the market. As entities like Charles Schwab, Morgan Stanley, and JPMorgan integrate crypto offerings, it legitimizes digital assets and broadens their accessibility to a wider audience. This trend is further amplified by advancements in AI, where platforms like ours leverage AI agents to analyze market trends, identify trading opportunities, and manage risk. Our AI-driven insights and automated trading strategies aim to empower both seasoned traders and newcomers navigate this evolving landscape. Understanding the interplay between traditional finance's established infrastructure and the innovative potential of AI in crypto is crucial for future success in this dynamic market. You can explore how our AI capabilities are shaping investment strategies by visiting our AI Agents section.

More to Read:

• How AI is Revolutionizing Cryptocurrency Trading
• Understanding the Risks and Rewards of Crypto Derivatives
• The Future of Digital Asset Regulation