Robinhood Taps Bitstamp To Offer Crypto In US And Europe

Robinhood Markets is planning to offer cryptocurrency futures to its customers in the U.S. and Europe later this year, according to Bloomberg News.

The commission-free trading app will leverage the licenses of Bitstamp, a crypto exchange it agreed to buy last month for $200 million, once the transaction closes next year.

Robinhood plans to introduce CME-based futures for Bitcoin and Ether in the U.S. However, a spokesperson for the company stated, “We have no imminent plans to launch these offerings.”

The acquisition of Bitstamp, expected to close next year, will allow Robinhood to use Bitstamp’s licenses to offer perpetual futures for Bitcoin and other tokens in Europe. These plans have not been publicly announced and come from anonymous sources, according to Bloomberg.

A crypto derivatives contract is a financial instrument whose value is based on an underlying cryptocurrency asset. It enables traders to speculate on price movements without owning the asset.

If Robinhood begins offering crypto derivatives, it will compete directly with Coinbase, which is already active in the crypto derivatives market.

Robinhood reported a strong surge in crypto trading activity in the first quarter of 2024, with a 224% increase in trading volumes to $36 billion. Nearly 40% of its transaction-based revenue came from crypto-related services, leading to the company’s second consecutive profitable quarter with a net income of $157 million.

Despite the growing demand, Robinhood’s crypto business faces several challenges. On May 6, the company received a Wells notice from the U.S. Securities and Exchange Commission (SEC), indicating potential enforcement action against its crypto arm.

The SEC’s investigation focuses on Robinhood’s cryptocurrency listings and custodian operations for alleged securities violations. As a precaution, Robinhood does not offer staking services in the United States, nor does it list certain crypto tokens or provide lending services.

Robinhood also acquired Pluto Capital Inc., an AI-driven investment research platform, to provide more tailored investment strategies and analysis for its users. The terms of the deal were not disclosed.

Founded by Jacob Sansbury, 24, Pluto Capital is renowned for offering personalized investment advice and real-time analytics using artificial intelligence. The acquisition aligns with Robinhood’s strategy to integrate advanced AI capabilities into its platform to sweeten its offerings for retail investors.