A new feature in Robinhood’s crypto expansion allows traders more control over digital assets.
Crypto wallets will be tested with select clients next month, the newly public brokerage stated Wednesday. They can trade, give and receive digital currency as well as move them within the Robinhood app.
Robinhood’s stock jumped 10.9% on Wednesday.
Some users, particularly Dogecoin traders, have recently complained on social media that using Robinhood as their broker gave them exposure to crypto values but not ownership of the currencies.
Robinhood Chief Product Officer Aparna Chennapragada told CNBC in a phone interview that the company is not first to market. “We’ll bring in a few clients, iterate on the product, collect feedback, and then expand.”
Before joining Robinhood, Chennapragada led product, engineering, and design teams at Google for 12 years. Clients on a waitlist will eventually be able to join.
Robinhood’s burgeoning crypto
Cryptocurrency trading began three years ago, but it has grown in importance to the company’s bottom line. Trading cryptocurrencies accounted for over half of Robinhood’s transaction-based income last quarter. That’s up from 3% a year ago.
The new wallets would allow users to aggregate their digital currency. Clients can then trade, transmit, and receive cryptocurrency. Coinbase and Gemini already have it. The trading app’s beta version will have this capability, according to Bloomberg News.
Since bitcoin hit an all-time high in April, there has been increased anxiety about regulation.
Crypto fell along with the market on Monday, with bitcoin down around 7%. The fall reignited the argument over whether bitcoin is a safe-haven asset. In recent years, bitcoin has tended to decline along with the broader markets.
The software now allows users to set up recurring crypto investments. Clients can buy bitcoin for as little as $1 commission-free.
The broker’s move comes as the SEC, particularly Chairman Gary Gensler, tightens its grip on cryptocurrencies. He told legislators last week that the SEC is working on legislation to regulate the volatile cryptocurrency markets while protecting American innovation.
Gensler told the Senate Banking Committee that “we just do not have appropriate investor protection in crypto financing, issuance, trading, or lending.” For now, it’s like the Wild West or the old ‘buyer beware’ era before the securities rules were written.
To keep funds safe from hackers, Robinhood claimed the crypto wallets will have identity verification, multifactor authentication, email and phone verification.
Our regulators and the SEC fully aligned in working on this with educational tools, protection and safety. “Good for customers, good for us,” Chennapragada remarked.