Robinhood Expands Its Cryptocurrency Operations
Robinhood plans to expand its cryptocurrency trading operations and may add new coins to the platform, which would somehow fix the situation with GameStop.
Trying to smooth out the corners
“We want to make a huge investment and hire a lot of people,” CEO Vlad Tenev said in a video released by the company on March 18. “We will try to do this as quickly as possible. We also want to add new coins.”
The online brokerage company Menlo Park, California, added cryptocurrency trading features to its platform in 2018. But this business has only recently begun to develop. In February, Robinhood reported that in less than two months, it had 6 million customers trading cryptocurrencies. In 2020, the average monthly number of new customers trading with Robinhood Crypto was about 200,000.
Users can buy Bitcoin, Ethereum, and some other cryptocurrencies, but cannot transfer coins to and from their accounts. In February, the company said it intends to provide the ability to deposit and withdraw cryptocurrencies, including the popular DOGE meme coin, in the future.
In the video, Tenev said that his team was hesitant to launch cryptocurrency trading without these features.
“I think the reason we ultimately decided to do this is because there is a use case for people who don’t want to manage their own coins and just want to treat it as an investment,” Tenev said. “However, we want to give people the ability to manage their own wallets and keys.”
To justify the need to trade cryptocurrency on Robinhood, Tenev compared investing without commission in the app with Coinbase, the largest cryptocurrency exchange in the United States. Coinbase charges a commission of half a percent (0.50%) for buying and selling cryptocurrency.
But cryptocurrency traders, far more sensitive to privacy and centralization issues than traditional retail investors, may not want to trust Robinhood with their assets. After an 800% increase in the value of DOGE in January, Robinhood temporarily suspended instant deposits for purchases in cryptocurrency, which means that users could only buy assets with funds already deposited in their accounts.
Investors are not very happy
Congressional hearings on GameStop’s insane trading and media reports have also revealed a lack of transparency regarding Robinhood’s payment for order flow practices. The brokerage company receives compensation for directing the execution of the transaction to third parties, usually more commonly used by trading firms. This could be a bitter pill for crypto investors.
Tenev acknowledged that Robinhood will take time to recover from the latest controversy, but he remains hopeful that the company will be able to win back customers. “I think the focus is on making sure the product speaks for itself and continues to make it better and better,” Tenev said.
Robinhood is preparing for an IPO later this year. Last year, the business was valued at $ 11.2 billion, although according to February rumors, the current valuation could be as high as $ 40 billion.