Robinhood, the American financial services company known for pioneering commission-free trades of stocks and exchange-traded funds, has made a significant stride in the European market by introducing its cryptocurrency trading services. This development comes shortly after the company commenced stock-broking services in the UK, marking its initial step into the international arena.
Starting Thursday, European investors will have access to Robinhood’s platform, enabling them to buy and sell over 25 cryptocurrencies. This range includes well-known digital currencies like Bitcoin, Ether, and Solana’s SOL. Johann Kerbrat, the general manager of Robinhood Crypto, confirmed this in a recent interview with Bloomberg.
Robinhood eyes EU growth with new crypto strategy
In a novel approach to attract and retain customers, the exchange has introduced a loyalty program. Under this scheme, a portion of each user’s monthly trading volume will be rewarded in Bitcoin. This strategy aligns with the recent uptick in cryptocurrency prices, fueled by expectations around U.S. interest rate changes and the possible launch of a Bitcoin-focused exchange-traded fund.
Despite a 75% increase in crypto trading volumes in November, Robinhood’s overall performance has been affected by subdued trading enthusiasm compared to the peak during the COVID-19 pandemic. This is evident from a reported 55% drop in crypto trading volumes compared to the previous year.
Robinhood’s move into Europe is notable, given the current regulatory landscape. The company has no plans to extend these crypto services to the UK market, citing unclear regulations regarding digital assets. In contrast, the company has registered as a virtual currency exchange operator in Lithuania and is seeking approvals across more EU countries.
Future plans and revenue model
Robinhood’s revenue from these crypto brokerage services will primarily come from rebates from market makers and trading venues. In Europe, the rebate rate is set at about 65 basis points per trade, a significant increase from the 35 basis points in the U.S.
Currently, the platform offers around 15 tokens in its home market. Still, it had to remove some, including SOL and MATIC, following the U.S. Securities and Exchange Commission’s decision to classify them as unregistered securities. This regulatory pressure has led major U.S. crypto exchanges, including Coinbase, Kraken, and Gemini, to expand overseas.
For now, European users of Robinhood Crypto cannot transfer their crypto holdings outside the app. However, the company plans to introduce this feature next year with additional tokens and staking services. This expansion is in anticipation of the EU’s new Markets in Cryptoassets (MiCA) regime, which is set to be implemented in early 2025. Under MiCA, Robinhood will need full authorization as a crypto service provider in at least one EU member state.
Robinhood’s latest venture into the European Union marks a significant step in its international expansion. Robinhood will capture a significant share of the growing European cryptocurrency market by offering commission-free crypto trading and an innovative loyalty program. However, the company must navigate a complex regulatory environment as it broadens its regional services and offerings.
