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A day after the Robinhood trading app halted buying hot stocks like GameStop and AMC, infuriating customers, the app disabled a key cryptocurrency buying function on Friday.
The paid feature, Instant Buying, allows customers to transfer funds from a bank account and use the funds immediately, before they are settled.
“Due to extraordinary market conditions, we have temporarily disabled instant purchasing power for crypto,” Robinhood said in a statement to Yahoo Finance. “Customers can still use settled funds to buy crypto. We will continue to monitor market conditions and communicate with our customers. “
Robinhood did not say, in their statement or blog post about the restriction, what the extraordinary conditions were, nor did they mention specific cryptocurrencies.
But bitcoin (BTC-USD) rose 15% on Friday, a rebound accelerated by Elon Musk on Twitter; and the memes-based dogecoin token (DOGE-USD) rose 165%, fueled by social media.
It wasn’t just Robinhood. Amid the market mania this week, TD Ameritrade and Schwab imposed restrictions on margin trading in booming stocks, limiting the amount clients could borrow for trades; Webull, an app that Robinhood users fled to after Robinhood was restricted, also restricted the purchase of the same shares. Stocks are seen as bullish for cryptocurrency and DeFi (decentralized financial applications), as they could bring new entrants into a space without traditional financial intermediaries.
Following Robinhood’s actions this week, the tech unicorn, which has a valuation of $ 12 billion and aims to go public this year, finds itself in hot water with everyone from lawmakers to customers.
New York Rep. Alexandria Ocasio-Cortez, Texas Senator Ted Cruz and California Rep. Ro Khanna are just a few of the politicians to issue outrage over the Robinhood action on Thursday, which was seen as harming retail investors. Robinhood has already been hit with a class action lawsuit from clients for these events. And the company is raising $ 1 billion in new emergency funding to cover its cash flow shortfall.
In a blog post Thursday, Robinhood said its halt to buying for rising stocks was “a risk management decision” and that “we have SEC net capital requirements and clearing house deposits. .. Some of these requirements vary a bit depending on the volatility in the market and they can be substantial in today’s environment where there is a lot of volatility and a lot of activity concentrated in these names which have gone viral on the media. social.
And in a series of tweets Thursday afternoon, CEO Vlad Tenev said the app’s decisions on Thursday were “not taken at the direction of a market maker we’re talking to or other market players.”
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Daniel Roberts is a senior editor at Yahoo Finance and has been covering bitcoin since 2011. Follow him on Twitter at @readDanwrite.
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