Robinhood, whose mobile app lets users buy and sell public stocks without trading fees, on Thursday confirmed that it will allow US customers to explore cryptocurrency trading, beginning with Bitcoin and Ethereum next month.
The free stock-trading app joins a short list of US-based brokers that offer cryptocurrency trading products. The move follows growing global demand for such instruments, with the app expected to launch fully within the coming weeks.
The company is set to initially launch twо crypto trading pairs for residents in five states – California, Massachusetts, Missouri, Montana and New Hampshire.
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By mid-2018, the trading app will make the new instruments available nationwide, with its newly created unit Robinhood Crypto planning to roll out the service gradually as other US states will be following in waves.
Robinhood seeks to carve out its niche by letting traders buy and sell cryptocurrency for $0 a trade. In doing so, the company plans to make money off of order flows, a common tactic used by a few brokers to generate revenue by directing orders to certain trading venues. The company also receives interest on unused cash deposits from user accounts and offers a premium paid account for $10 per month, which gives users added features.
The six-year-old startup has been growing at an explosive rate. For now, Robinhood is able to afloat its free platform through making compromises to some business aspects such as not having many physical locations, a small staff for client service, and not spending on massive promotional campaigns.
Commenting on the news, Baiju Bhatt, co-founder of Robinhood, said: “Now in Robinhood, for the first time, consumers will be able to invest in and trade stocks, ETFs, options and cryptocurrencies all in one place. You don’t need to have different apps, or be checking stocks on Robinhood and then logging into some exchange in Asia to trade your cryptocurrencies. It’s all consolidated.”
“There will be a wait list, and we will onboard customers at a rate at which we can support them. We’re not strangers to trading operations. We’ve been doing this for years now in public markets, and we’ll take what we’ve learned from doing this and apply it to crypto,” Bhatt added.