- Next month, Robinhood will test “crypto wallets” with a select group of clients, allowing investors to send, receive, and transfer cryptocurrencies in and out of the Robinhood app.
- In recent months, some users have taken to social media to complain that by using Robinhood, they gained exposure to cryptocurrency prices but did not actually own the coins.
- The move comes as cryptocurrency accounts for a growing portion of Robinhood’s revenue.
- On Wednesday, Robinhood’s stock rose 10.9%.
In its latest cryptocurrency expansion, Robinhood is introducing a feature that gives traders more control over digital tokens.
The newly public brokerage will begin testing “crypto wallets” with select clients next month, according to a blog post published on Wednesday. The wallet will enable investors to trade, send, and receive digital currencies, as well as transfer them in and out of the Robinhood app.
On Wednesday, Robinhood’s stock rose 10.9 %.
Some users, particularly Dogecoin traders, have taken to social media in recent months 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 chief product officer Aparna Chennapragada told CNBC in a phone interview. “We’ll have a few customers come in, iterate on the product, get the customer feedback and then expand from there.”
Certain clients will begin testing the product, and Robinhood will share their feedback on its blog and Twitter, according to Chennapragada, who previously led product, engineering, and design teams at Google before joining Robinhood. Clients on a waitlist will eventually be able to join the rollout.
Robinhood’s growing crypto business
The startup launched cryptocurrency trading three years ago, but it has grown in importance to the company’s bottom line. Last quarter, cryptocurrency trading accounted for more than half of Robinhood’s transaction-based revenue. This is an increase from just 3% a year ago.
Clients will be able to consolidate their digital coins into a single account using the new wallets. After that, clients can trade, send, and receive cryptocurrencies to and from other wallet addresses. Bloomberg News was the first to report Robinhood’s intention to include this feature in a beta version of the trading app.
Bitcoin and other cryptocurrencies have experienced significant volatility since bitcoin reached an all-time high in April, owing to increased regulatory concerns.
Cryptocurrencies fell along with the broader market on Monday, with bitcoin ending the day about 7% lower. The slide reignited the debate over whether bitcoin can or should be considered a safe-haven asset. In recent years, bitcoin has exhibited a greater proclivity to fall in tandem with the broader markets.
Robinhood also announced that a new feature allowing the creation of recurring crypto investments is now available on the app. Customers can schedule a commission-free cryptocurrency purchase for as little as $1.
The broker’s action comes as the Securities and Exchange Commission, particularly Chairman Gary Gensler, is increasing his scrutiny of cryptocurrencies. Last week; Gensler assured lawmakers that Wall Street’s top regulator is working to develop a set of rules to govern; the volatile cryptocurrency markets while also protecting the interests of American innovators.
“Currently; we just don’t have enough investor protection in crypto finance; issuance, trading, or lending,” Gensler said in prepared remarks to the Senate Banking Committee. “Frankly, at this time; it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted.”
To keep coins safe from hackers; Robinhood said the crypto wallets will have several security features such as identity verification; multifactor authentication, and email and phone verification.
“We are completely aligned with our regulators; and the SEC to make sure that we are working on this with educational tools; with protection with safety. That’s great for customers that’s great for us,” Chennapragada said.