Robinhood Expands into European Market, Launches Commission-Free Cryptocurrency Trading App

Zhitong App has learned that Robinhood is launching commission-free cryptocurrency trading services in the European Union, following last week's launch of its stock brokerage services in the UK.

John Cobrat, General Manager of Robinhood's cryptocurrency division, stated that the app will go live on Thursday and will allow European investors to buy and sell over 25 cryptocurrencies, including Bitcoin, Ethereum, and Solana's SOL. In addition, the company will offer a loyalty program similar to cashback, returning a certain percentage of the user's monthly trading volume in Bitcoin.

It is understood that Robinhood, headquartered in Silicon Valley, currently has no immediate plans to offer its cryptocurrency services to UK investors. Cobrat explained that this is due to a lack of regulatory clarity on digital assets in the country.

Robinhood will generate revenue from its cryptocurrency brokerage business by obtaining rebates from market makers and trading venues. Cobrat stated that in Europe, the rebate for each transaction will be "approximately 65 basis points," nearly twice the 35 basis points the company earns from executing cryptocurrency orders in the United States.

It is worth mentioning that the launch of this service comes at a time when cryptocurrency prices are rebounding, mainly due to market expectations of a possible reversal of US interest rate hikes and the latest progress in the industry's first Bitcoin spot ETF, which may be seen as early as next month. Robinhood stated in its investor update on Monday that nominal cryptocurrency trading volume in November increased by 75% compared to the previous month.

Although cryptocurrency prices have risen this year, trading volume remains relatively low compared to the surge in retail investor enthusiasm during the COVID-19 pandemic. This lack of enthusiasm has affected Robinhood's overall performance, as the company's third-quarter revenue declined due to a 55% decrease in cryptocurrency trading volume compared to the same period last year.

In terms of other risks, since Robinhood first launched cryptocurrency trading in 2018, the company currently lists about 15 tokens in its domestic market, and regulatory agencies have been cracking down on this asset class.

After the US Securities and Exchange Commission classified them as unregistered securities in June, the trading app removed several tokens from its market, including SOL and Polygon's MATIC. Regulatory crackdowns in the US have led to US cryptocurrency exchanges such as Coinbase (COIN.US), Kraken, and Gemini expanding their overseas operations.

Currently, European customers of Robinhood's cryptocurrency cannot transfer their cryptocurrency holdings outside of the app. Cobrat stated that the company plans to add this feature next year, along with more tokens and staking services.

Since September last year, Robinhood has been registered as a virtual currency exchange operator in Lithuania and is working to obtain approval in more EU countries. Once the new European Market in Crypto-Assets (MiCA) regime comes into effect in early 2025, the company will need to obtain full authorization as a cryptocurrency service provider in at least one EU member state.