Robinhood Doubles Down on Crypto With Deal for Bitstamp
Move comes a month after SEC notice of a potential lawsuit over the brokerage’s crypto offerings
By
Caitlin Ostroff
Updated June 6, 2024 10:01 am ET
Robinhood’s revenue from crypto trading more than tripled in the first quarter. PHOTO: AMIR HAMJA FOR THE WALL STREET JOURNAL
Robinhood HOOD 4.75%increase; green up pointing triangle is wading deeper into crypto with a $200 million deal for Bitstamp, despite the Securities and Exchange Commission’s warning that it plans to sue the brokerage over its digital-assets business.
The deal for the crypto exchange comes a month after Robinhood disclosed that it received a so-called Wells notice that the regulator is preparing to sue the company over alleged violations of securities laws.
The acquisition is Robinhood’s largest to date and would allow the firm to serve institutional crypto clients and expand its crypto offerings internationally, the company said. Bitstamp holds more than 50 licenses and registrations globally.
Founded in 2011, Bitstamp is a smaller crypto exchange than many of its rivals, ranking behind Binance, Coinbase and Kraken in monthly trading volume, according to the crypto analytics firm CCData.
Robinhood has been focused on becoming more than just a trading app for newbie stock and options investors. The brokerage rolled out retirement accounts last year, launched a credit card in March and is planning to add such features as futures trading later this year
Its revenue from crypto trading ballooned in the first quarter, surging to $126 million from $38 million a year earlier. Crypto assets under custody more than doubled to $26 billion at the end of March from a year earlier. Monthly notional crypto trading volume nearly tripled year over year in April.
“Everything we’ve been doing in the past few years has been because our engagement from customers has been that they want more crypto products,” Johann Kerbrat, general manager of Robinhood Crypto, said in an interview.
Kerbrat said the acquired exchange would continue to operate under the Bitstamp brand. The deal, which is subject to regulatory approval, is expected to close in the first half of next year.
Robinhood began offering cryptocurrency trading in 2018, starting with bitcoin and ether, the two largest cryptocurrencies. The brokerage firm has in the past been more conservative than many crypto-oriented businesses in the number of digital currencies it allows customers to trade and the services it provides.
Robinhood hasn’t allowed customers to earn yield on their crypto holdings through lending or “staking,” a type of service that has landed other firms in hot water with the SEC. In staking, crypto investors pledge their crypto holdings to a network for a specified period, earning money. With its acquisition of Bitstamp, Robinhood will expand its crypto products into those areas in international markets. In the U.S., it will focus on enabling crypto-for-crypto trading among institutional clients.
The Wells notice wasn’t a final indication that the SEC will sue Robinhood. Firms that receive such notices are allowed to respond and tell the agency why it shouldn’t proceed with a civil lawsuit.
“We’re obviously disappointed about the notice, but we’re going to keep working with the regulator. At the same time, Robinhood Crypto is here to stay,” Kerbrat said. “We feel very good about our offering in the U.S.”
The SEC has stepped up litigation against the crypto industry, saying firms must comply with securities laws to ensure that investors in nascent digital-currency markets benefit from the same disclosures and protections against fraud and manipulation that exist in the stock market.
The crypto industry argues that securities laws dating back to the 1930s are out of date and poorly suited to digital currencies. Crypto firms and executives have piled money into the coming election in the hopes of getting more crypto-friendly legislation passed in Congress.
Move comes a month after SEC notice of a potential lawsuit over the brokerage’s crypto offerings
By
Caitlin Ostroff
Updated June 6, 2024 10:01 am ET
Robinhood’s revenue from crypto trading more than tripled in the first quarter. PHOTO: AMIR HAMJA FOR THE WALL STREET JOURNAL
Robinhood HOOD 4.75%increase; green up pointing triangle is wading deeper into crypto with a $200 million deal for Bitstamp, despite the Securities and Exchange Commission’s warning that it plans to sue the brokerage over its digital-assets business.
The deal for the crypto exchange comes a month after Robinhood disclosed that it received a so-called Wells notice that the regulator is preparing to sue the company over alleged violations of securities laws.
The acquisition is Robinhood’s largest to date and would allow the firm to serve institutional crypto clients and expand its crypto offerings internationally, the company said. Bitstamp holds more than 50 licenses and registrations globally.
Founded in 2011, Bitstamp is a smaller crypto exchange than many of its rivals, ranking behind Binance, Coinbase and Kraken in monthly trading volume, according to the crypto analytics firm CCData.
Robinhood has been focused on becoming more than just a trading app for newbie stock and options investors. The brokerage rolled out retirement accounts last year, launched a credit card in March and is planning to add such features as futures trading later this year
Its revenue from crypto trading ballooned in the first quarter, surging to $126 million from $38 million a year earlier. Crypto assets under custody more than doubled to $26 billion at the end of March from a year earlier. Monthly notional crypto trading volume nearly tripled year over year in April.
“Everything we’ve been doing in the past few years has been because our engagement from customers has been that they want more crypto products,” Johann Kerbrat, general manager of Robinhood Crypto, said in an interview.
Kerbrat said the acquired exchange would continue to operate under the Bitstamp brand. The deal, which is subject to regulatory approval, is expected to close in the first half of next year.
Robinhood began offering cryptocurrency trading in 2018, starting with bitcoin and ether, the two largest cryptocurrencies. The brokerage firm has in the past been more conservative than many crypto-oriented businesses in the number of digital currencies it allows customers to trade and the services it provides.
Robinhood hasn’t allowed customers to earn yield on their crypto holdings through lending or “staking,” a type of service that has landed other firms in hot water with the SEC. In staking, crypto investors pledge their crypto holdings to a network for a specified period, earning money. With its acquisition of Bitstamp, Robinhood will expand its crypto products into those areas in international markets. In the U.S., it will focus on enabling crypto-for-crypto trading among institutional clients.
The Wells notice wasn’t a final indication that the SEC will sue Robinhood. Firms that receive such notices are allowed to respond and tell the agency why it shouldn’t proceed with a civil lawsuit.
“We’re obviously disappointed about the notice, but we’re going to keep working with the regulator. At the same time, Robinhood Crypto is here to stay,” Kerbrat said. “We feel very good about our offering in the U.S.”
The SEC has stepped up litigation against the crypto industry, saying firms must comply with securities laws to ensure that investors in nascent digital-currency markets benefit from the same disclosures and protections against fraud and manipulation that exist in the stock market.
The crypto industry argues that securities laws dating back to the 1930s are out of date and poorly suited to digital currencies. Crypto firms and executives have piled money into the coming election in the hopes of getting more crypto-friendly legislation passed in Congress.
