A new feature in Robinhood’s crypto expansion gives traders more control over digital tokens.
Crypto wallets will be tested with select clients next month, the newly public brokerage announced Wednesday. They can trade, send and receive digital currencies as well as move them within the Robinhood app.
Robinhood’s stock rose 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 prices but not ownership of the coins.
In a phone interview, Robinhood Chief Product Officer Aparna Chennapragada told CNBC that the company is not first to market. “We’ll bring in a few customers, iterate on the product, get 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 its bottom line. Trading cryptocurrency accounted for over half of Robinhood’s transaction-based revenue last quarter. That’s up from 3% a year ago.
The new wallets will allow users to consolidate their digital coins. Clients can then trade, send, and receive cryptocurrencies. Coinbase and Gemini already have it. The trading app’s beta version will include this feature, according to Bloomberg News.
Since bitcoin hit an all-time high in April, there has been increased concern about regulation.
Cryptocurrencies fell along with the market on Monday, with bitcoin down around 7%. The slide reignited the debate over whether bitcoin is a safe-haven asset. In recent years, bitcoin has tended to dip along with the broader markets.
The app now allows users to set up recurring crypto investments. Clients can buy crypto for as little as $1 commission-free.
The broker’s move comes as the SEC, particularly Chairman Gary Gensler, tightens its grip on cryptocurrencies. Last week, he told lawmakers that the SEC is working on rules to regulate the volatile cryptocurrency markets while protecting American innovators.
Gensler told the Senate Banking Committee that “we simply do not have enough investor protection in crypto finance, issuance, trading, or lending.” For now, it’s like the Wild West or the old ‘buyer beware’ world before the securities laws were enacted.
Robinhood said the crypto wallets will have identity verification, multifactor authentication, email, and phone verification to keep coins safe from hackers.
Our regulators and the SEC fully aligned in working on this with educational tools, protection and safety. “Good for customers, good for us,” Chennapragada said.