Robinhood’s new crypto wallet will let customers loose in the crypto sector
Robinhood’s new crypto wallet will let customers loose in the crypto sector

Investing app Robinhood (HOOD) said Wednesday it will provide a crypto wallet for customers, letting them send and receive crypto assets off its platform. Officially live in early 2022, the service gives an entirely new set of retail investors keys to the crypto sector. With this added access comes risks for customers and the chance the company is changing how users interact with its platform.

The announcement comes after reports that Robinhood is publicly beta testing a wallet service, something customers have requested over the past year.

Almost all cryptocurrency exchanges allow customers to transact on and off their platform. Robinhood still hasn’t given that functionality to customers. Unlike ACH bank transfers for fiat currencies, crypto transactions place greater responsibility on users because blockchain-based transactions are permanent. Most exchange-based wallet services offer a copy/paste feature that reduces mistakes in sending “on-chain transactions.” However, misplacing just one digit in a wallet address during a crypto transaction sends a user’s money to the wrong address permanently.

“A lot of our crypto customers are new to crypto and haven’t actually transacted on-chain,” Christine Brown, Robinhood Crypto’s Chief Operating Officer told Yahoo Finance. “We spent a lot of time working on our safety features and wanted to make sure that our experience is up to par with what our customers would expect.”
A crypto wallet allows users to send and receive cryptocurrency to and from other wallet addresses. Previously, Robinhood held all its customers’ cryptocurrency and users could not take their holdings off the platform.

The wallet service comes as Robinhood rolls out more crypto trading features, such as the ability to place recurring buy orders to dollar cost average into a coin, a strategy that helps investors reduce volatility. Brown said Robinhood is looking to add more crypto assets “for later this year and into 2022.”

A crypto wallet using 0% transaction fees
Similar to how it treats stock trading on its platform, Robinhood doesn’t charge fees for buying and selling crypto. Paired with a digital wallet, the company is looking to use 0% transaction fees as a competitive advantage in the crypto space.

“If I’m looking to buy an NFT, Robinhood might be the most competitive place to get a price on Ethereum (ETH) then send it off the platform,” said Brown. “We have a healthy ambition to bring a whole lot of crypto benefits to our users. This is just the start.”

In the last year, hiring on the company’s crypto side quadrupled to about 80 employees. One reason is because crypto is becoming a major source of revenue for the company. Details from Robinhood’s latest earnings release showed 60% of customers bought or sold crypto in the previous quarter and for the first time ever, more new customers placed their first trade in crypto rather than equities. The report also showed that Robinhood’s revenue from cryptocurrencies increased to $233 million in the second quarter, up from $5 million in Q2 2020. Robinhood reported 21.3 million people actively use the platform for trading.