Bloomberg has recently reported that an anonymous source familiar with the matter claims that eTrade wanted to offer Bitcoin (BTC) and Ethereum (ETH) to their options offered to clients. This would clearly help virtual currencies reach a larger number of larger investors that want to have exposure to virtual currencies.
How Will Crypto Fees Be Determined At ETrade?
eTrade currently has 4.9 million brokerage accounts and over $65 billion of assets, according to the U.S. Securities and Exchange Commission (SEC). The brokerage had a total margin balance of $9.6 billion as well.
eTrade will be competing against other platforms that have already been established in the market. That includes Robinhood, which offers zero-fee trading services for users in several US States. However, will the low-fee model work for eTrade or it will not be effective for its business model?
Cryptocurrency markets and investments work by being able to process large numbers of trades for users. Some of the traders are also able to make several numbers of trades each day. Crypto exchanges have been working with skimming minimal fees on trading and were able to make money off the aggregate action.
Meanwhile, eTrade has been imposing a massive trading fee for what cryptocurrency users are used to. Users have to pay $6.95 every single time they trade stocks or exchange-traded funds (ETFs). Meanwhile, the fee drops down to $4.95 for more active users.
At the moment, there is no information about whether the company will be integrating these services to a separated crypto platform or if it will be using its traditional trading portal. Thus, eTrade, with its large fees, will be completely different than other services and companies such as Robinhood.
The firm will clearly want to keep their fees down to remain competitive with other platforms such as Binance or Coinbase, among others. Younger trades and millennials would clearly not accept a fee of $6.95 for trading virtual currencies when they can do it in other platforms for much less.
At the same time, eTrade could be using a similar format similar to Coinbase. Coinbase works with two different platforms. Trading activities take place on Coinbase Pro, which was called GDAX in the past. The latter offers much lower fees than the main Coinbase platform that has fees between $0.99 and $2.99 for purchasing cryptocurrencies.
At the moment, there is no specific fee scheme for eTrade. There is no information on whether they will be changing their fees or not. In addition to it, they are targetting larger investors that are ready to pay for these fees knowing that they are using an already established, known, recognized and regulated platform rather than an exchange located in another jurisdiction and without established services for larger and institutional investors.