Robinhood to launch cryptocurrency wallets as bitcoin grows larger in business

Robinhood is launching a feature that gives traders more control over digital tokens in its latest expansion into the cryptocurrency space.

The new public brokerage firm is testing “crypto wallets” with selected clients next month, the company said in a blog post on 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.

Robinhood shares rose 5% on Wednesday.

In recent months, some users – especially Dogecoin traders – have taken to social media to complain that by using Robinhood as a broker, they are exposed to crypto prices but not actual ownership of the coins. parts themselves.

“We’re not the first to hit the market – we’ve taken our time to make sure we’re building this in a phased approach,” Aparna Chennapragada, Robinhood’s chief product officer, told CNBC in a telephone interview. “We’ll have a few customers who come in, iterate on the product, get customer feedback, and then develop from there. “

Some customers will start testing the product and Robinhood will share their comments on its blog and Twitter, said Chennapragada, who spent 12 years with Google’s product, engineering and design teams before joining Robinhood. The deployment will eventually allow customers on a waiting list to register.

The start-up got its start in cryptocurrency trading three years ago, but has grown increasingly important to the company’s bottom line. In the last quarter, more than half of Robinhood’s transaction-based income came from cryptocurrency trading, down from just 3% a year earlier.

The new wallets will allow customers to consolidate their digital coins into one account. Customers 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 on Robinhood’s plan to roll out this feature in a beta version of the trading app.

Bitcoin and other cryptocurrencies have seen high volatility since bitcoin’s all-time high in April amid more regulatory concerns.

Cryptocurrencies plunged alongside the broader market on Monday, with bitcoin ending the day down around 7%. The slide resurfaced the debate over whether bitcoin can or should serve as a safe haven. In recent years, bitcoin has tended to fall more with larger markets.

Robinhood also said that a new feature for setting up recurring crypto investments was live on the app on Wednesday. Customers can schedule a crypto purchase, with no commission, for as little as $ 1.

The broker’s move comes as cryptocurrencies come under closer scrutiny by the Securities and Exchange Commission, especially Chairman Gary Gensler. Gensler last week assured lawmakers that Wall Street’s top regulator is working overtime to create a set of rules to oversee 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, back then, it looks more like the Old West or the old world of the ‘prudent buyer’ that existed before securities laws were enacted.”

Robinhood said crypto wallets will have several security features including identity verification, multi-factor authentication, and email and phone verification to protect coins from hackers.

“We’re completely aligned with our regulators and the SEC to make sure we’re working on this with educational tools, with protection and security. It’s great for clients, it’s great for us,” said Chennapragada.