E*Trade is adding crypto, and once that happens CEX’s biggest moat might be gone

Morgan Stanley confirmed they're launching crypto trading on E*Trade before 2026, charging 0.5% in fees.

Most people probably see this as just another traditional institution getting into crypto, but I think what actually matters is the user base behind E*Trade. Millions of accounts that already have KYC done, bank accounts linked, and are used to buying stocks on there. The friction for these guys to buy crypto is basically 0, it's just a tap away.

0.5% fee isn't cheap by crypto standards, Binance maker fees are under 0.1%. But for E*Trade stock users that never touched a CEX in their life, they're not even gonna compare that. Their reference point is buying stocks, not Binance.

I'm more interested in how this affects market structure. These traditional investors behave completely differently from crypto natives. They don't check funding rates, don't trade perps, don't chase alts, they just buy spot and hold. Which means BTC's circulating supply gets locked up even more.

I went on bydfi and coinbase to compare the recent funding rates between BTC and ETH when the news came out. I found BTC side has been pretty stable, ETH is way more volatile. If traditional users really only buy those two after E*Trade launches, that divergence could get even more obvious.

What do you think, are traditional brokerages adding crypto a threat to existing CEXs or actually good for them? Or are these just completely different user groups that don't even compete with each other?