Robinhood to allow users to hold their own cryptocurrencies and NFTs as start-up achieves growth beyond stock trading

Vlad Tenev, CEO and co-founder of Robinhood Markets, Inc., is displayed on a screen during his company’s IPO at the Nasdaq Market site in Times Square in New York City, USA, July 29, 2021.

Brendan McDermid | Reuters

Robin Hood is handing over the encryption keys to some customers.

The trading and investment firm announced Tuesday that it will allow users to hold and hold their cryptocurrencies and NFTs in a separate, standalone app. It is Robinhood’s latest move into the digital assets space as it seeks to grow beyond stock trading after facing a more than 70% equity decline since its IPO last July.

A new app puts Robinhood in full competition with Coinbase and startups like MetaMask. Coinbase CEO Brian Armstrong called his company’s product the most downloaded mobile self-care wallet in the United States in a tweet on Monday.

Who holds, or “custody,” someone’s cryptocurrency has become a controversial issue in the industry, fueling the viral phrase “not your keys, not your coins”. Some fears of storing assets on an exchange make them more vulnerable to hacking or censorship.

Robinhood, which topped the CNBC Disruptor 50 list last year, has made a name for itself by offering commission-free stock exchanges. Its value and user base soared during the pandemic as it ushered in a new generation of traders. Robinhood also became the center of the meme saga after limiting trade in GameStopthe highly short name that Reddit traders bought in spite of Wall Street short sellers.

Commercial activity has slowed down significantly of the last year. For the three months ending March 31, Robinhood’s revenue was down 43% from a year ago. Since its public debut in August, shares have plummeted by more than 70% and are more than 85% below their all-time high.

In an effort to spur revenue and user growth, Robinhood has added more cryptocurrency products and features. In late March, Robinhood also added extended stock market hours. Robinhood rolled out an older version of crypto wallets to customers in early April, which will still be available within the main Robinhood app.

Robinhood said the new wallet will launch with a waiting list first and will be available internationally.

The app will allow users to store NFTs and connect to NFT markets and “decentralized” stock exchanges. It will also allow users to earn returns across other platforms and access a “variety of crypto assets on other exchanges.”

The new app in particular will not charge any network fees, despite Ethereum and bitcoin fees in some cases reaching as high as $ 70. A Robinhood spokesperson said the crypto product will rely on “competing” third-party liquidity providers for behind-the-scenes customer transactions in order to offset those network fees.

Robinhood derives most of its revenue from transaction fees in its core trading business, through a brokerage industry practice called payment per order flow.

— CNBC’s Jesse Pound contributed to the reporting.

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