Charles Schwab, the financial giant with over $9.9 trillion in assets under management (AUM), is preparing to enter the spot crypto ETF (exchange-traded fund) market.
However, the move is contingent on regulatory clarity in the U.S., according to incoming CEO Rick Wurster, who made the disclosure in an interview Thursday with Bloomberg Radio. Wurster, who will take over in January, cited the potential for favorable regulatory changes under President-elect Donald Trump.
Charles Schwab looks at crypto ETF market in sight
Schwab has been actively exploring the crypto space through ETFs and futures. Its Crypto Thematic ETF (STCE) focuses on companies involved in cryptocurrency mining, trading, and blockchain technology.
STCE does not directly invest in digital assets, however. However, the firm’s readiness to offer direct trading signals a significant shift. It reflects the growing pressure on Wall Street to meet retail and institutional demand for crypto products.
We will enter spot crypto when the regulatory environment changes, Wurster said.
The statement reflects Schwab’s cautious but ambitious approach. The firm’s internal surveys conducted in October revealed strong interest from clients. Specifically, nearly half of respondents said they plan to invest in crypto-related ETFs in the next year. The survey caught the attention of Eric Balchunas and Nate Geraci, experts in the ETF space.
Charles Schwab Internal Research. Source: October 2024 Press Release
Trump Administration's Pro-Crypto Agenda
The expectation of regulatory clarity stems from Trump’s campaign promises. The president-elect has made a number of promises, including establishing a Bitcoin reserve, protecting crypto mining, and implementing industry-friendly policies. Trump’s promise to fire SEC Chairman Gary Gensler was a key part of his crypto-focused platform.
In a surprise announcement on Thursday, Gensler confirmed that he would step down by January 20, 2025. In his farewell address, he defended his tenure while admitting that crypto regulation is still a work in progress. Gensler acknowledged that changing the SEC’s approach toward digital assets would be crucial to maintaining investor confidence.
Under Trump’s leadership, experts predict a significant shift in the U.S. regulatory environment. Trump’s policies aim to align the country with global crypto hubs, fostering innovation while addressing security and compliance concerns. Analysts suggest that these changes could attract more institutional players like Schwab, positioning the U.S. as a leader in the crypto space.
Wurster expressed optimism about these developments, emphasizing that regulatory clarity would allow Schwab to offer a wider range of crypto products. While acknowledging his personal lack of crypto investments, he acknowledged the market’s appeal.
Crypto certainly caught the attention of many, and they made a lot of money from it. I didn’t buy crypto, and now I feel silly, he admitted.
Rick Wurster, Incoming Schwab CEO, Says He Anticipates Crypto Regulation Will Change
Crypto seeks partnership with Schwab amid challenges
The push for spot crypto offerings has also attracted outside interest. VanEck’s head of digital asset research Matthew Sigel revealed that a crypto asset manager has approached Schwab for a potential collaboration, signaling the industry’s willingness to align with established financial giants.
I heard that a certain crypto asset manager went to Schwab today proposing a partnership, Sigel said.
This interest is in line with the broader trend of traditional finance (TradFi) embracing crypto. Schwab’s entry into the spot market would represent a milestone for the company and for the mainstream adoption of digital assets.
Despite the positive momentum, Schwab faces challenges, including operating in a competitive crypto field. Platforms like Robinhood have gained significant traction among retail investors by offering hassle-free crypto trading experiences. Schwab’s ability to differentiate itself through solid offerings and trust built over decades will be critical.
Furthermore, regulatory uncertainties still loom. While the Trump administration promises a more supportive environment, the murky waters of crypto regulation in the US may take time to resolve. Schwab’s cautious approach reflects an understanding of these challenges, ensuring that its foray into the crypto market is aligned with the long-term interests of its clients.
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