On Wednesday, Robinhood said that it would start offering crypto wallets on its platform. The rapidly growing stock broker is now in direct competition with some of the renowned digital currency exchanges like Coinbase because of its offerings. Robinhood customers will be able to use the wallet for directly owning as well as transferring bitcoin and other crypto. Currently, they are only permitted to just trade crypto, but they will also be able to use cryptocurrencies to pay for goods and services. On Wednesday, Robinhood saw its share price climb by 11%, which lifted its market capitalization to a whopping $40 billion.
According to Robinhood, it will begin testing its wallet in October with a small group of customers before they expand this offering to the rest of its 32 million registered users. Within hours of the announcement, almost 300,000 customers had signed up for the wait-list of the wallet, as per the information shared by the Robinhood app. In the second quarter of 2021, almost $233 million of the company’s revenue was contributed by crypto trading, which was higher by $5 million in the same quarter last year. According to the broker, nearly 60% of the funded accounts on Robinhood engaged in some form of crypto trading in the second quarter of the year.
During this period, almost 62% of the revenue from crypto transactions was derived from the cryptocurrency dogecoin. This crypto was originally conceived as a joke and Elon Musk then championed it, which gave its popularity a significant boost. The crypto assets of the broker under custody had reached a total of $2.7 billion by the end of the period, which is around 29 times greater than it had been last year. In a recent presentation, Robinhood informed retail investors that one of the most vital offerings of its international expansion would be none other than crypto trading.
The broker’s plans also include allowing its customers to make recurring investments in cryptocurrencies automatically. The burgeoning crypto industry has been under increasing scrutiny of the financial regulators. There are still very limited protections for consumers who may be harmed while trading these digital assets. It is not surprising that regulators have also focused on Robinhood, especially for its ‘gamified’ and streamlined user experience. Animations are used for stimulating trading behavior and it takes users seconds for buying and selling cryptocurrencies and stocks.
Robinhood used a push notification for announcing its wallet launch to its customers, which included a ‘high-five’ emoji. A link was also tweeted by the brokerage to a video clip of the show Seinfeld. It showed the face of Vlad Tenev, the co-founder of Robinhood, superimposed on that of the TV show’s character George Costanza. The video showed him pulling out an overflowing leather wallet from his pants’ back pocket. With the introduction of this new wallet feature on its platform, Robinhood gets the perfect opportunity to muscle deeper into the territory of popular crypto exchanges like Coinbase and establish itself in the crypto space.
