- Robinhood is testing “crypto wallets” with select clients next month to allow investors to send, receive and move 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 had exposure to crypto prices but not actual ownership of the coins themselves.
- The move comes as cryptocurrency makes up an increasingly large part of Robinhood’s revenue.
Robinhood is debuting a feature that gives traders more control over digital tokens in its latest expansion in the cryptocurrency space.
The newly public brokerage is testing “crypto wallets” with select clients next month, the company announced in a blog post Wednesday. 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’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 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 eventually allow clients on a waitlist to join.
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. Last quarter, more than half of Robinhood’s transaction-based revenue came from cryptocurrency trading, up from just 3% a year earlier.
The new wallets will let clients to consolidate their digital coins into one account. Clients can then trade, send and receive cryptocurrencies to and from other wallet addresses. Rivals Coinbase and Gemini already offer this feature. Bloomberg News first reported Robinhood’s plan to roll out this feature in a beta version of the trading app.
Bitcoin and other cryptocurrencies have seen sharp volatility since bitcoin’s all-time high in April amid more concerns about regulation.
Cryptocurrencies took a dive alongside the broader market on Monday, with bitcoin ending the day about 7% lower. The slide resurfaced the debate about whether bitcoin can or should serve as a safe-haven asset. In more recent years, bitcoin has shown more of a tendency to dip with the broader markets.
Robinhood also said a new feature that allows the set-up of recurring crypto investments is live on the app on Wednesday. Clients can schedule a crypto purchase, commission free, for as low as $1.
The broker’s move comes as cryptocurrencies are under more scrutiny from the Securities and Exchange Commission, particularly Chairman Gary Gensler. 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.
“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.”
Robinhood said the crypto wallets will have several safety features including identity verification, multi-factor authentication, and email and phone verification to keep coins safe from hackers.
“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.
Shares of Robinhood ticked 2% higher in premarket trading on Wednesday.