E*TRADE from Morgan Stanley Digital Assets Supplement for Self-Directed Accounts
Risk Disclosure
TRADING DIGITAL ASSETS IS HIGHLY SPECULATIVE, VOLATILE, AND RISKY. TRADING IN DIGITAL ASSETS IS APPROPRIATE ONLY FOR THOSE CLIENTS WHO UNDERSTAND AND ARE WILLING TO ASSUME THE ECONOMIC, LEGAL, AND OTHER RISKS INVOLVED AND ARE FINANCIALLY ABLE TO ASSUME SIGNIFICANT LOSSES. UNLIKE CERTAIN OTHER INSTRUMENTS, DIGITAL ASSETS MAY NOT ENTITLE THE HOLDER TO ANY OWNERSHIP STAKE OR FUTURE CASH FLOW. ACCORDINGLY, THE VALUE OF A PARTICULAR DIGITAL ASSET MAY BE BASED SOLELY ON MARKET SUPPLY AND DEMAND, AS OPPOSED TO ANY UNDERLYING FUNDAMENTALS. SINCE THE VALUE OF DIGITAL ASSETS MAY BE DERIVED FROM THE CONTINUED WILLINGNESS OF MARKET PARTICIPANTS TO TRADE IN THESE PRODUCTS, CUSTOMERS MAY FACE THE TOTAL LOSS OF THEIR INVESTMENT SHOULD THE MARKET FOR THAT INSTRUMENT DISAPPEAR.
PLEASE SEE THE DIGITAL ASSETS RISK ACKNOWLEDGMENT FOR MORE INFORMATION.
Disclosure Concerning the Different Regulatory Treatment of Your E*TRADE Self-Directed Securities Account and zerohash Digital Assets Account
YOUR ZEROHASH ACCOUNT AND YOUR E*TRADE SELF-DIRECTED ACCOUNT ARE SUBJECT TO DIFFERENT REGULATORY TREATMENT. SPECIFICALLY, YOUR ZEROHASH ACCOUNT UNDER THE ZEROHASH USER AGREEMENT IS HELD BY ZEROHASH, AND DIGITAL ASSETS CARRIED IN AND FOR YOUR ZEROHASH ACCOUNT UNDER THE ZEROHASH USER AGREEMENT ARE NOT DEPOSITS AND ARE NOT SUBJECT TO INSURANCE PROTECTION, INCLUDING BUT NOT LIMITED TO THAT PROVIDED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (“FDIC”) AND THE SECURITIES INVESTOR PROTECTION CORPORATION (“SIPC”).
1. Digital Asset Services Provided Solely by zerohash
Client understands and agrees that the Digital Asset Services are provided to Client solely by zerohash pursuant to zerohash's User Agreement between Client and zerohash (the “zerohash User Agreement”), to which Client has separately agreed prior to engaging in any activity in the Supported Digital Assets, as that term is defined below. Client authorizes MSSB to provide zerohash with information and data pertaining to Client (including but not limited to Background Information as defined in the zerohash User Agreement, as well as any tax certification and related supporting documentation or information, such as IRS Form W-9) necessary for zerohash to provide the Digital Asset Services to Client and to comply with legal or regulatory obligations. Client further understands and agrees that not all services described in the zerohash User Agreement will be available to Client via the Digital Asset Services contemplated under this Digital Assets Supplement. MSSB reserves the right to modify, restrict, or suspend access to the Digital Asset Services at any time without prior notice at our sole discretion.
The Digital Asset Services are provided solely as an ancillary service to the services contemplated by the Self-Directed Account Agreement. Client understands and acknowledges that MSSB does not transact in or custody digital assets, and that all digital asset transactions and custody occurs through an account in Client’s name at zerohash (the “zerohash Account”) and outside of MSSB. zerohash is an independent and unaffiliated third-party of MSSB, and Client accepts any and all risks associated with engaging in the Digital Asset Services provided by zerohash, including but not limited to the risk of zerohash’s insolvency with respect to Supported Digital Assets in Client’s zerohash Account and fiat funds resulting from sales of Supported Digital Assets that were not received by MSSB prior to the insolvency of zerohash. Client further represents and warrants that Client has independently evaluated and vetted zerohash prior to engaging in the Digital Asset Services.
2. No Brokerage Relationship for Digital Asset Transactions
Client agrees and acknowledges that MSSB does not accept orders for digital assets and does not act as an agent or broker in connection with any digital asset transactions. This Digital Assets Supplement does not establish any agency or brokerage relationship between MSSB and Client with respect to digital asset transactions or custody. MSSB’s Platform transmits trading or transfer instructions, as provided by Client, to zerohash. zerohash, in its sole discretion, determines whether to accept any trading instruction as an order and is the entity with which Client maintains a direct relationship for purposes of executing digital asset transactions and providing digital asset custody services. All digital asset trading and custody services are provided exclusively by zerohash, and MSSB bears no responsibility or liability for the execution, settlement, or safekeeping of digital assets. No order to trade is accepted until it is accepted by zerohash.
3. Digital Asset Transactions
A. Cash Requirements for Orders to Purchase Digital Assets
Client must designate one E*TRADE from Morgan Stanley Self-Directed Account (the “Self-Directed Account”) as the source of funds for the zerohash Account. The value of orders for purchases of Supported Digital Assets in the zerohash Account shall not exceed the cash available in the Self-Directed Account.
Client understands and agrees that all purchases of Supported Digital Assets in their zerohash Account must be funded solely with settled cash that is fully available for withdrawal in their Self-Directed Account. Under no circumstances may Client use unsettled funds, including but not limited to proceeds from recent sales of securities that have not yet cleared, pending deposits, or any other non-finalized credits, to initiate or settle trades. MSSB reserves the right to cancel, reverse, or restrict any transfers to the zerohash Account that are found to be in violation of this provision, and Client shall bear any resulting losses, costs, or liabilities.
B. Automatic Cash Movement By MSSB
Client authorizes and instructs MSSB to debit Client’s Self-Directed Account for purpose of automatic transfer to Client’s zerohash Account for any order for, or executed purchase of, Supported Digital Assets (inclusive of any commissions, charges, fees, and taxes) arising from any order Client has placed with zerohash through the Platform. Client further authorizes and instructs MSSB to automatically transfer to Client’s Self-Directed Account any cash proceeds in Client's zerohash Account resulting from the sale of Supported Digital Assets, or any other cash amounts due to Client from zerohash. Client understands that once funds are transferred to Client’s zerohash Account, such funds are outside of MSSB’s control, and that funds due to Client from zerohash may not be available for use until they are received in fact by MSSB.
C. Limited Trading Hours and Trading Restrictions
Client understands and acknowledges that banking hours may be more limited than the trading hours for Supported Digital Assets offered by zerohash in Client’s zerohash Account, and as such, transfers effected pursuant to trading activity outside of regular banking hours may be delayed, which may result in Client’s inability to utilize such funds or execute trades until the next business day. Client understands that although cash proceeds from sales of Supported Digital Assets may be displayed immediately in Client’s Self-Directed Account, such funds may not be deposited and available for use until MSSB receives such funds from zerohash. For the avoidance of doubt, Client further understands that such displayed funds may be removed if not ultimately received by MSSB from zerohash.
Client understands and acknowledges that MSSB reserves the right in its sole discretion to restrict trading to the extent orders are submitted outside of regular banking hours or when MSSB’s ability to send funds to zerohash is delayed. Client further understands and agrees that to the extent Client submits trading or transfer instruction to zerohash during such times, MSSB shall not be liable for any trading losses or missed opportunities.
D. Transaction Limits
Client acknowledges and agrees that MSSB or zerohash may impose limits on the amount of Supported Digital Assets that Client may purchase, sell, or transfer either in one transaction or over the course of a pre-established time period. Client acknowledges that MSSB has no obligation to inform Client of such limits in advance of imposing or modifying the limits.
E. Errors
Client further understands and agrees that MSSB is not responsible for any errors in submission or transmission of trading or transfer instructions by you to zerohash. Notwithstanding the foregoing, to the extent MSSB determines, in its sole discretion, that a trade error resulting from a broker-assisted function has occurred and that a cash credit or other adjustment to your Self-Directed Account is warranted, Client acknowledges and agrees certain credits or adjustments may be reportable by MSSB on Form 1099 and constitute a taxable event for which Client is solely responsible. Client is responsible for the settlement of all transactions resulting from executions of orders (including partial executions) regardless of (a) any delay in transmission or receipt of a transaction confirmation or execution report and (b) whether you received an electronic acknowledgment of the order executed by zerohash.
F. Delegated Authority
In the event that Client delegates or has delegated authority over their Self-Directed Account to a third-party individual or entity as Authorized Agent, you understand and agree that such authority will not extend to your zerohash Account.
4. Assets in Client’s zerohash Account
A. Supported Digital Assets
MSSB reserves the right to make certain digital assets available to trade on the Platform (the “Supported Digital Assets”). MSSB is not obligated to make all digital assets supported by zerohash available for trading. A list of Supported Digital Assets will be available on the Platform.
B. No Margin; No Lien
Client acknowledges and agrees that all purchases of Supported Digital Assets must be fully funded and that trading of Supported Digital Assets on margin is not permitted. Client further acknowledges and agrees that assets held in Client's zerohash Account (including but not limited to Supported Digital Assets and fiat currency funds) will have no margin value in Client’s Self-Directed Account, nor will MSSB have any security interest or lien over such assets.
C. No FDIC or SIPC Protection
Client understands that assets held in Client’s zerohash Account (including but not limited to Supported Digital Assets and fiat currency funds) are subject to the control of and in the custody of zerohash and not of MSSB. Client acknowledges that Client assets in the zerohash Account are not securities and are not subject to Federal Deposit Insurance Corporation (FDIC) or Securities Investor Protection Corporation (SIPC) protection.
D. Digital Asset Transfers
Client understands and agrees that Client may transfer Supported Digital Assets into and/or out of Client’s zerohash Account solely via the Platform to/from another account in Client’s name. Client further understands and agrees that any attempts to transfer Supported Digital Assets through a method other than the Platform may result in such digital assets becoming inaccessible or unrecoverable. MSSB shall not be liable or responsible for any transfer instructions submitted by you to zerohash, including but not limited to incorrect or incomplete transaction details and attempts to transfer unsupported digital assets, or for any delays or rejections in processing such instructions. Client agrees that Client is solely responsible for ensuring the accuracy of any transfer instruction submitted to zerohash via the Platform, including but not limited to the destination address, type, and amount of Supported Digital Assets. Client acknowledges that any such instruction to transfer Supported Digital Assets received by zerohash cannot be reversed once broadcast to the relevant network or exchange, even while pending. Client further acknowledges that transfers of Supported Digital Assets will be subject to any transaction limits outlined in Section 3.D. above.
E. Conversion of Digital Assets Due to Death
Notice of a Client’s death should be provided to MSSB via Notifying us of someone's death. This estate conversion process will be coordinated by MSSB and zerohash.
Client acknowledges that MSSB has limited the account types that are eligible to open a zerohash Account through its platform. Client understands and agrees, therefore, that upon death, MSSB will require your Estate representative or any non-US individual beneficiaries that you have designated on your Self-Directed Account, which designation you agree applies to your zerohash Account, to open (i) a brokerage account at MSSB, and (ii) an unlinked account directly at zerohash in order to convert all the Client’s assets.
5. Fees
Client understands and agrees that zerohash may charge Client fees or commissions which may be displayed as an all-in price on your bid ask spread or as a direct commission displayed on the Platform. Client further understands that MSSB shall not charge Client any fees or commissions for referring business to zerohash. MSSB may nevertheless receive remuneration from zerohash for allowing Client to access the Digital Asset Services and any trading activity therefrom.
Client acknowledges that MSSB may establish an incentive or reward program whereby Client will be eligible to receive rebates or rewards from either zerohash or MSSB based on the volume of Client’s trading activity or other factors. In the event MSSB adopts such a program, MSSB shall make Client aware of the terms thereof via the Platform.
6. Communications With You; Consent to Electronic Delivery
You understand and agree that all communications with you regarding the Digital Asset Services, including but not limited to transaction receipts, account statements, and other documents generated by zerohash (the “zerohash Documents”), will be delivered electronically through the Platform or via email to the email address associated with your Self-Directed Account, and that to the extent you wish to receive paper copies, you must contact zerohash. Client understands that MSSB shall have no responsibility or liability for zerohash’s performance, timeliness, or ability to fulfill such requests, nor will MSSB provide paper copies of any communications regarding the Digital Asset Services.
Client further understands that the zerohash Documents are provided through the Platform for your convenience and that the provision by MSSB of the zerohash Documents via the Platform does not create, is not intended to create, and does not otherwise imply or establish any agency or brokerage relationship between MSSB and Client with respect to the Digital Asset Services.
A. Transaction Receipts
Client understands and agrees that MSSB is not obligated to provide you with any transaction receipts relating to your transactions in Supported Digital Assets, and that such obligation remains with zerohash. zerohash is responsible for generating transaction receipts, which MSSB will display or provide to you via the Platform, but we do not guarantee the accuracy or timeliness of such transaction receipts. Client understands that neither MSSB nor any of MSSB’s affiliates are liable for any losses arising out of or relating to delayed issuance or failure to issue a transaction receipt, or from errors in such transaction receipts that are subsequently generated, provided, and/or corrected by zerohash.
As indicated in the zerohash User Agreement, Client is solely responsible for reviewing transaction receipts generated by zerohash for accuracy and completeness, including notifying zerohash of any suspected errors. Client acknowledges and agrees that notification of any suspected errors must be made pursuant to the procedures outlined in the zerohash User Agreement, which may require that notification be made within a certain timeframe of trade execution. Client acknowledges that failure to follow the procedures established by zerohash with respect to a transaction may result in the waiver of Client’s right to dispute such transaction.
7. Limitation of Liability
MSSB shall not be liable for any damage, disruption, trading losses, or other losses, including but not limited to losses resulting from fraud, theft, cybersecurity breaches, operational failures, Platform downtime, insolvency, or other adverse events, that occur at or are caused by zerohash or relating to the Digital Asset Services, whether directly or indirectly. Client understands that MSSB does not control and is not responsible for the internal operations, security practices, or risk management of zerohash and/or your zerohash Account.
Client understands and agrees that if zerohash or MSSB detects or reasonably suspects fraudulent activity, misuse, or any other behavior that violates applicable laws or the terms of this Digital Assets Supplement or the zerohash User Agreement, each shall have the right to notify the other of such activity. Upon receiving such notice, the receiving party may take appropriate action, which may include investigating the reported activity, suspending services, or terminating Client’s Self-Directed Account and/or Client’s zerohash Account. MSSB reserves the right to close or restrict Client’s Self-Directed Account and/or access to the Digital Asset Services if fraudulent or prohibited activity is suspected or confirmed, whether detected internally or reported by zerohash. Client agrees that, in the event MSSB does restrict your Self-Directed Account and/or access to the Digital Asset Services, MSSB shall not be liable for any damage suffered as a result, including but not limited to damage resulting from fluctuations in the market value of the securities held in your Self-Directed Account or Supported Digital Assets held in your zerohash Account.
MSSB shall not be liable for any trading losses, damage, disruption, or other losses resulting from any interruptions or delays in accessing the Digital Asset Services due to Platform downtime, scheduled or otherwise.
8. Indemnification
In addition to your indemnification obligations set forth in the Self-Directed Account Agreement, you agree to fully indemnify, hold harmless, and reimburse the Indemnified Parties from and against any and all Losses arising out of or relating to, whether directly or indirectly:
i. any transaction effected pursuant to this Digital Assets Supplement in accordance with any communication, notice, instruction, or order received from you, your agent or Authorized Agent, or an individual whom any Indemnified Party believes to be authorized to act on your behalf;
ii. any erroneous, mismatched, or incomplete identifying information on any transfer instruction;
iii. your failure to perform on any obligation pursuant to this Digital Assets Supplement;
iv. a breach of any representation, warranty, or covenant made by you hereunder or any subsequent false or misleading statement or representation made by you or your Authorized Agent(s); and
v. any action taken by MSSB or our affiliates to enforce our rights under this Digital Assets Supplement.
9. Tax Lot Selection
You acknowledge and agree that when you hold multiple tax lots on the same asset in your zerohash Account, zerohash retains sole discretion to determine which tax lots to use in effecting any sale, transfer, or disposition. Unless otherwise required by Applicable Law, zerohash will apply a first-in, first-out (“FIFO”) method to identify the tax lots sold. zerohash reserves the right to change this lot selection method at any point. You further understand and agree that zerohash may not provide functionality that allows you to select specific tax lots for sale or disposition, and that application of FIFO may result in a greater or lesser taxable gain or loss than if you had been able to select different tax lots. You remain solely responsible for any resulting tax consequences.
10. Handling of Client Complaints
If you have a question, concern, or complaint regarding the Digital Asset Services, you may contact us at any time by calling 800-387-2331 or contact zerohash directly. You understand and agree that any complaints or inquiries received by us relating to the Digital Asset Services provided by zerohash and otherwise unrelated to your Self-Directed Account will be promptly forwarded to zerohash for response and resolution. As indicated in the zerohash User Agreement, zerohash is responsible for the handling and resolution of any inquiries, complaints, or disputes arising from the Digital Asset Services, including but not limited to the safeguarding, transfer, and disposition of any digital assets or fiat funds in your zerohash Account.
Please refer to the zerohash User Agreement for additional information on the methods for filing formal complaints regarding the Digital Asset Services directly with state regulators, as applicable.
For any questions, concerns, or complaints regarding your Self-Directed Account and unrelated to the Digital Asset Services, please refer to the Self-Directed Account Agreement in addition to Section 12 below on Dispute Resolution.
11. Amendment No Waiver
MSSB may amend, supplement, or rescind any and all provisions of this Digital Assets Supplement at any time subject to Applicable Law. While MSSB will endeavor to provide 30 days’ prior notice of any such amendment, supplement, or rescission to this Digital Assets Supplement, you understand and agree that, except as otherwise indicated, any amendment, supplement, or rescission to this Digital Assets Supplement will be effective as of posting.
Any amendment, supplement, or rescission of this Digital Assets Supplement will be posted to etrade.com when made, and such posting shall constitute proper notice to you. If you continue to maintain your zerohash Account after such notice, you will be deemed to have accepted such changes and will be legally bound by such amended or supplemented terms and conditions. The rights and remedies conferred upon MSSB shall be cumulative, and its forbearance to take any remedial action available to it under this Digital Assets Supplement shall not waive its right at any time or from time to time thereafter to take such action.
12. Dispute Resolution
Client understands that the predispute arbitration clause in Section 12 of the Self-Directed Account Agreement is incorporated herein by reference. By agreeing to this Digital Assets Supplement, Client acknowledges that they have read, understood, and agree to be bound by the terms thereof.