Morgan Stanley has started a pilot programme for spot cryptocurrency trading on its retail brokerage platform E*Trade, The Block reported on Tuesday.

Fees are lower than rivals. Morgan Stanley plans to expand the service to all 8.6 million E*Trade customers within the year.

Morgan Stanley is using the pilot to accelerate the expansion of digital asset products and services for retail customers. Jed Finn (제드 핀), head of Morgan Stanley wealth management, said the initiative goes beyond simply enabling crypto trading at lower fees.

Bloomberg senior ETF analyst Eric Balchunas said Morgan Stanley's 0.5 percent fee is lower than Charles Schwab's 0.75 percent.

Morgan Stanley had kept its distance from the cryptocurrency market until October last year, but later changed course. It said it would allow crypto allocations of up to 4 percent in aggressive customer portfolios based on high risk and high return. Just before the pilot, it also launched the spot bitcoin ETF MSBT in response to rising customer interest in crypto. MSBT recorded net inflows of $103 million in its first 6 trading days, and its assets under management have now exceeded $205 million.

Morgan Stanley is also preparing additional services. It plans to add a function that allows customers to convert cryptocurrencies directly into shares of listed products such as ETFs without selling the crypto first. In the second half of this year, it plans to introduce tokenised stock trading for institutional clients. Last month, its banking investment division also launched a stablecoin reserve fund that maintains a net asset value of $1 in line with the GENIUS Act.