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Robinhood Takes on the World of Crypto

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February 24, 2018 | 

Joanna Newman |  0 Comments| 

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Stock trading mobile app provider, Robinhood is slowly making a name for itself in the realm of crypto-trading. After successfully launching Bitcoin and Ether trading services last month, Robinhood decided to make its name known in the industry.

The company, which was founded in 2013 to democratize stock trading, announced today that it will be making its Bitcoin and Ether trading services free of charge on their mobile app.

If the company’s goal last month was only to attract more enthusiasts to cryptocurrency, now that they have managed to reach 4 million users, it opens new questions about their true motives.

"We've come to understand that cryptocurrencies as an asset have exhibited clear and underlying resiliency and have integrated themselves as part of a diversified and balanced portfolio," Robinhood co-founder and CEO, Vlad Tenev, said to CoinDesk last month while they were launching their new free cryptocurrency trading offers.

https://www.youtube.com/watch?v=233RzfqYExI

The new, free trading services will only affect Bitcoin and Ethereum and will only be offered to crypto-traders located in five US states: California, Massachusetts, Missouri, Montana and New Hampshire. However, plans to include more states have already been set in motion.

The company, which is regulated in the U.S. by the SEC and the Financial Industry Regulatory Authority (Finra), plans to offer the crypto trading service for free. Also, the company has promised instant transfers on cryptocurrency purchases of $1,000 or less, which is a significant improvement for people buying cryptocurrency for the first time.

Tenev explained: "We view entering the world crypto-finance as a way to extend our user base and build our brand."

Crypto Meets Stock


While offering the service for free seems risky, the company, which has already “reached 100 billion user transactions on its exchange”, hopes to attract investors from the $550 billion-dollar industry to their platform and its products, which is already providing streams of revenue for its customers. Robinhood reported on its website that they have already earner “over $1 billion in commissions that have been saved on trades”.

The firm charges for a premium service called Robinhood Gold, which enables margin trading and after-hours trading. The company also generates revenue by collecting interest on cash and securities in user accounts, much like a traditional bank.

Having already raised a total of $176 million in venture capital, the new free trading feature is in line with Robinhood's push to add more to its product line. Last month, the firm rolled out options trading and a month earlier, it added a web-based platform to its mobile services.



But, their move isn't just about luring cryptocurrency enthusiasts to its products, it's also about giving users, who are normally focused on traditional investments, exposure to cryptocurrency.

According to Tenev, the firm has recently attracted 3 million new user accounts and earned $100 billion in total transactions.

Speaking for the company's interest in bringing together traditional assets with nascent crypto assets, Tenev said:

"We envision a world where people can have cryptocurrencies alongside their stocks, ETFs, and more."

Robinhood has not built its own cryptocurrency wallet yet but will be using a third-party provider. While Robinhood will manage cryptocurrency on the user's behalf, Tenev said the company does not intend to make investments with the cryptocurrency that its customers store in their accounts.

Information is the Nerve of Wealth


At the same time, the company has also announced the creating of the Robinhood Feed. This new service will allow the sharing of strategic information related to the industry. On the company’s website, the new feature is described as:

“A brand-new way to discuss cryptocurrencies, news, and market swings with other investors on Robinhood in real-time.”.

The service will not be available to everyone, but only a limited number of investors based on their feedback.


Coins to Come


While Robinhood customers only have access to Bitcoin and Ethereum trading, the company has allowed its customers to add 16 different cryptocurrencies (including Bitcoin and Ethereum) to their "watchlist," which is a feature that allows them to monitor market data, read related news and create price alerts.

Other coins that can be added to the watchlist are Bitcoin Cash, Litecoin, XRP (Ripple), Ethereum Classic, Zcash, Monero, Dash, Stellar, Qtum, Bitcoin Gold, Omisego, NEO, Lisk, and Dogecoin.

For now, Tenev isn't revealing any plans to start trading these other currencies, however, he said that a "listing committee" has been created to analyze factors such as security, functionality and demand, which helps assess cryptocurrencies that could be added to the trading functionality or the market data list in the future.

And, while the company is interested in adding new cryptocurrencies to its trading platform, Tenev said Robinhood would not be adding any of the more complicated asset classes tied to crypto such as Bitcoin or Ethereum futures.

He said:

"Now, we're focused on the coins themselves, and I think in the near future we anticipate adding a variety of other coins before we extend our line-up to new asset classes."

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