Charles Schwab has announced plans to enable cryptocurrency transactions, allowing clients to make purchases using Bitcoin and Ether. This new feature comes through a division named Schwab Crypto, revealed on Thursday.
With this development, Schwab is positioning itself against competitors like Robinhood, which appeals to a younger audience by integrating stock and cryptocurrency investments alongside various other financial services. Coinbase is another rival that permits customers to trade both cryptocurrencies and stocks.
As one of the largest brokerages globally, managing over $11 trillion in client assets, Schwab has taken note of the growing client interest in crypto investing. The new feature is set to launch in the next few weeks.
CEO Rick Wurster mentioned that many clients express a desire to consolidate their assets at Schwab. “What we’re hearing from a lot of our clients is that they have 98% of their wealth here at Schwab, and they might have 1% or 2% in some digital native company to hold their crypto, and they really want to bring that back to Schwab because they trust us.” He noted this in an interview with CNBC last July.
This initiative further blends traditional finance with the burgeoning realm of crypto assets and digital finance. Schwab’s move reflects a wider trend of major banks and brokerages embracing cryptocurrencies. Their previous hesitance may be shifting, perhaps fueled by the favorable regulatory climate under the current administration.
Recently, Morgan Stanley rolled out a spot Bitcoin ETF, while Goldman Sachs has filed to introduce a Bitcoin Income ETF, indicating a wider acceptance of crypto among traditional financial institutions.
Schwab will charge a 0.75% commission on each transaction; to put this into perspective, Robinhood provides commission-free trading, while Coinbase’s fees can reach up to 4% for retail customers. The brokerage has teamed up with Paxos for custody, ensuring crypto funds are kept in a separate Schwab account distinct from the brokerage.
On the day of the announcement, Schwab’s stock fell by 5%, impacted by disappointing first-quarter sales figures.
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