Robinhood to launch cryptocurrency wallets as bitcoin becomes a bigger part of business
Robinhood is debuting a feature that gives traders more control over digital tokens in its latest expansion in the cryptocurrency space.
A blog posting Wednesday announced that the newly-public brokerage will begin testing “crypto wallets”, with select clients, next month. The so-called wallet will allow investors to trade, send and receive digital currencies, as well as move them in and out of the Robinhood app.
In recent months, some users — particularly Dogecoin traders — have taken to social media to complain that by using Robinhood as their broker, they had exposure to crypto prices but not actual ownership of the coins themselves.
“We’re not first to the market — we’ve been taking our time to make sure that we build this in a phased approach,” Robinhood’s chief product officer Aparna Chennapragada told CNBC in a phone interview. “We will have some customers visit, we’ll iterate the product, gather customer feedback, and then grow from there.”
Certain clients will begin testing the product and Robinhood will share their feedback over its blog and Twitter, said Chennapragada, who spent 12 years at Google leading product, engineering and design teams before joining Robinhood. The rollout will allow those on the waiting list to become members.
Robinhood’s growing crypto business
The start-up debuted cryptocurrency trading three years ago but it has become increasingly important to the company’s top line. In the last quarter of 2018, more than half (50%) of Robinhood’s transactions-based revenue was generated by cryptocurrency trading. This is an increase from only 3% one year ago.
Clients can consolidate all their digital currencies into one account with the new wallets. The new wallets allow clients to send, trade and receive crypto currencies from different addresses. This is an already offered feature by Rivals Coinbase (and Gemini). Bloomberg News was first to report Robinhood’s intention to release this feature as a beta-version of their trading app.
As regulators worry about the regulation of cryptocurrency, Bitcoin and all other coins have been in sharp decline since April’s record high.
On Monday, cryptocurrencies fell along with the wider market. Bitcoin ended the day around 7% lower. The slide resurfaced the debate about whether bitcoin can or should serve as a safe-haven asset. Bitcoin has had a greater tendency to fall with other markets in recent years.
Robinhood also said a new feature that allows the set-up of recurring crypto investments is live on the app on Wednesday. A crypto purchase can be made by clients for as low as one dollar, and it is free of commission.
This broker’s action comes at a time when cryptocurrencies come under greater scrutiny from the Securities and Exchange Commission. Chairman Gary Gensler is particularly concerned. Last week, Gensler assured lawmakers that Wall Street’s top regulator is working overtime to create a set of rules to oversee the volatile cryptocurrency markets, while balancing the interests of American innovators.
Gensler stated that there is not enough protection for investors in cryptocurrency finance, issuance and trading. The current situation is more like the Wild West than the old world of buyer beware that was prevalent before the Securities laws were passed.
Robinhood stated that the security features of crypto wallets include identity verification, multifactor authentication and email verification. This will help keep your coins safe from hackers.
To ensure that the educational tools are safe and effective, we have partnered with regulators as well as with the SEC. Chennapragada explained that while this is great for customers, it’s also great for them.
Robinhood’s shares rose 2% in premarket trades on Wednesday.