Charles Schwab is preparing to offer cryptocurrencies to its investor clients when the regulatory environment becomes more favorable to cryptocurrencies and digital assets. This is to be expected given that Donald Trump won the US elections.
“We will get into spot crypto when the regulatory environment changes, and we anticipate that will change, and we are preparing for that eventuality,” Rick Wurster, Schwab’s chairman and new CEO, told Bloomberg.
Schwab already offers crypto-related ETFs and futures. This is the crypto spot that is still on the drawing board.
How important will crypto be to Schwab?
One of its competitors, Robinhood, has a relatively young customer base, averaging around 32 years old. It has been offering cryptocurrencies for some time, although in May it received a Wells Notice from the Securities and Exchange Commission (SEC) warning of potential legal action related to crypto custody, crypto listings -currencies and platform operations. Ironically, Robinhood’s chief legal officer, Dan Gallagher, has been touted as a potential SEC chair pick in the Trump administration, but he’s not interested.
In the first nine months of the year, more than 27% of Robinhood’s trading revenue came from cryptocurrency. In fact, Robinhood’s crypto revenue was 130% higher than its stock trading revenue. The only larger trading revenues were from options, which reached twice crypto revenues. For the record, trading revenue is only half of Robinhood’s total. Most of the rest is interest income.
If its regulated investment advisers (RIAs) are to be believed, crypto may not have as big an impact on Schwab. Crypto is known for catering to young investors. Schwab’s 2023 RIA Benchmarking Study found that 13% of clients are under 40, 31% are between 40 and 59, and 56% are 60 and older.
In addition to Schwab’s current ETF and futures offerings, it also has a stake in the institutional exchange EDX Markets, which Citadel Securities founded alongside Fidelity Digital Assets, Schwab, Paradigm, Sequoia Capital and Virtu Financial.
