Charles Schwab is exploring white-label solutions for crypto brokerage

Brokerage and financial advisory firm Charles Schwab is exploring how it can offer crypto trading to its customers through a partnership with a crypto firm, according to three sources familiar with the situation. 

The financial-services firm, which holds $6.8 trillion in customer assets, is said to be in discussions with several crypto firms. High-level executives at Schwab — including chief compliance officer and chief technology officer— are involved in the decision-making process, according to one source familiar with the discussions.

If it moves forward, Schwab would white-label the services of another crypto firm to offer the trading capability, the source explained. Schwab could support crypto trading by the end of this year.

When reached for comment, a representative for Schwab told The Block: 

"As you may be aware, we allow trading of the CME Bitcoin futures product to approved clients on our futures platform. In addition, Schwab offers clients the opportunity to trade certain OTC Trust products such as Grayscale’s Ethereum (Sym: ETHE) and Bitcoin (Sym: GBTC) Trust products. We will continue to listen to our clients’ feedback to make sure that our offering meets their needs."

Schwab announced in November 2019 that it acquired rival firm TDAmeritrade. Historically, TDAmeritrade has been more friendly to crypto and was said to be working with crypto exchange-operator ErisX on a crypto trading service for its clients. Those plans appeared to stall after the acquisition.

There are a number of firms in the crypto market looking to help financial technology firms and brokerages spin-up their own crypto trading offering. Under this arrangement, the crypto firms sit behind the scenes handling the liquidity and regulatory parameters. 

Crypto exchange Coinbase and Chicago-based Zero Hash are trying to woo traditional financial institutions with such offerings. Paxos, a New York firm known for its partnership with PayPal, also offers one such service called Paxos Crypto Brokerage Service. High-speed trading firm Jump Trading, meanwhile, powers Robinhood Crypto. 

The addition of crypto services has been a boon for some financial technology startups and brokerage firms. The most prominent example is Square, which began supporting bitcoin buys and sells in 2018. Last year it generated nearly $100 million in profit from selling bitcoin to its customers.

The firm reported 1 million users bought bitcoin for the first time in January. Robinhood, which jumped into crypto in 2018, has seen its crypto business grow rapidly this year despite a number of outages. The mobile brokerage added six million new users to its crypto platform during the first two months of the year.