- Robinhood expands to the EU with cryptocurrency trading.
- Offers over 25 cryptocurrencies, and plans more features in 2024.
- Focuses on security, transparency, and user incentives.
On Thursday, CNBC reported that major online brokerage Robinhood announced its expansion into the European Union with a new feature for trading cryptocurrencies. This move is part of the company’s strategy to explore growth opportunities in international markets.
The newly introduced cryptocurrency service by Robinhood will enable its users to purchase, sell, and maintain a portfolio of over 25 different cryptocurrencies. This selection includes well-known tokens such as Bitcoin, ether, ripple, cardano, Solana, and Polkadot. Looking ahead to 2024, Robinhood aims to broaden its offerings to include more tokens and introduce features like crypto transfers and “staking,” which allows users to earn rewards from their cryptocurrency holdings.
This development represents Robinhood’s second significant foray outside the United States. Previously, the company had revealed plans to introduce stock trading services for customers in the United Kingdom by early 2024. Just last week, Robinhood initiated a waitlist in the U.K. for this upcoming service, which promises to provide yields of up to 5% on customer deposits.
In an effort to attract users in the European Union, Robinhood is offering an incentive program that includes the chance to earn free Bitcoin. This offer is available to users who engage in frequent trading and recommend the app to their friends. The amount of bitcoin users can earn will be determined by a combination of their monthly trading volume and the number of new users they successfully refer during their sign-up process.
This strategic move by Robinhood aligns with a trend where numerous prominent U.S. cryptocurrency companies are shifting their focus to the European Union in search of growth opportunities. This shift is partly due to the challenging regulatory environment they face in the United States. The U.S. Securities and Exchange Commission has been actively pursuing legal actions against several crypto firms, including notable names like Coinbase and Binance, accusing them of breaching securities laws.
In contrast, the European Union is in the process of introducing a detailed regulatory framework known as the Markets in Crypto-Assets regulation. This proposed regulation aims to implement more stringent guidelines for cryptocurrency trading platforms and issuers of stablecoins, which are digital tokens tied to the value of tangible assets such as the U.S. dollar or the euro.
Johann Kerbrat, the General Manager of Robinhood Crypto, explained that the company selected the European Union as the initial international market for its cryptocurrency product because of the EU’s pioneering efforts in developing the world’s first detailed legal framework specifically designed for the cryptocurrency industry.
“The EU has developed one of the world’s most comprehensive policies for crypto asset regulation, which is why we chose the region to anchor Robinhood Crypto’s international expansion plans.”
Johann Kerbrat, General Manager, Robinhood Crypto
Robinhood is highlighting its European crypto service’s transparency and security to attract users. The firm will display trading spreads transparently, including rebates from sales and trade orders. The company ensures customer coins are separate from its funds, except for operational needs like blockchain fees. It stores customer cryptocurrencies in cold wallets, disconnected from the internet for added security.
Additionally, Robinhood has a crime insurance policy, underwritten by Lloyd’s, to protect a portion of assets in its storage systems against theft, including cyber breaches. This focus on security is crucial, given recent industry challenges. Crypto theft has been rampant, with significant hacks leading to substantial losses. For example, last month, the HTX exchange and Heco bridge, linked to entrepreneur Justin Sun, were hacked, resulting in a loss of around $115 million.
The industry also faced issues with the collapse of FTX, a $32 billion crypto exchange, last year. It was revealed that its sister firm, Alameda Research, misused customer funds for risky investments, highlighting the need for clear distinctions between trading platforms and custodians.
