‘Tough sell’ – Bloomberg analyst casts doubt on Charles Schwab’s crypto push

$12 trillion brokerage and commercial bank Charles Schwab has launched a phased roll-out for its Spot crypto trading division.

Dubbed Schwab Crypto, the platform will be live in the upcoming weeks and will offer direct access for retail investors to trade Bitcoin and Ethereum. 

Only the two top crypto assets will be supported for now. Other crypto assets will be added over time.

The platform will allow users to view both their crypto assets and traditional assets, including stock and ETF holdings. The launch comes after recent speculation that the firm was planning a major move into spot crypto support. 

Commenting on the debut, Joe Vietri, head of digital assets at Charles Schwab, said the move was aimed at helping retail investors diversify their portfolio. 

Our goal is to be the destination of choice for retail investors who want to incorporate digital assets into their portfolios with confidence.

There has been renewed institutional interest in the space this year. Major players such as Morgan Stanley, Goldman Sachs, NYSE, and others are joining the industry with new direct offerings.

Are Charles Schwab’s fees too high?

The firm will charge users 75 basis points (0.75%) for every trade placed. For context, Binance charges an average of 0.1% for every trade, with a potential discount if you use the native BNB asset. 

In comparison, Schwab’s fees are about 7.5 times as expensive as Binance’s. Intriguingly, even current Spot BTC ETF charges were way lower and more competitive than Schwab’s offers, noted Bloomberg analyst Eric Balchunas. 

According to him, Schwab Crypto could be a ‘tough sell’ from a cost perspective. 

Big news. Def better deal than most crypto exchanges for newbies, but IMO it’s tough sell vs ETFs (which are 2bps to buy vs 75bps for Schwab direct).

Giving more ETF nuances and the annual expense ratio associated with holding such wrappers, Balchunas added, 

That said, ETFs have an annual expense ratio vs none when buying directly. Bottom line: if you buy BTC one time and one time only and plan to hold 5+ years, then direct is cheaper. Otherwise, ETFs for the win all day long.

Meanwhile, Spot BTC ETFs saw $26 million of daily net inflow on Thursday, marking the third consecutive day of inflows. As of writing, BTC traded above $75K amid ongoing positive inflows. 

Final Summary

• Charles Schwab has debuted a Spot crypto trading platform starting with Bitcoin and Ethereum. 
• However, Bloomberg’s Balchunas cautioned that Schwab’s 0.75% fee per trade could be a ‘tough sell’ compared to Spot crypto ETFs.