US-based stock trading app Robinhood is taking the cryptocurrency trading market by surprise with the announcement that the broker will allow trading without any added transaction fees starting in February. This may make a huge impact for crypto traders that had little incentive to trade on a regular basis until now. For example Coinbase’s fees in the US range from 1.5 to 4 percent.
Robinhood co-founder Vlad Tenev. “We’re planning to operate this business on a break-even basis and we don’t plan to profit from it for the foreseeable future. The value of Robinhood Crypto is in growing our customer base and better serving our existing customers.”
Additionally, traders will be able to track the price, news, and set up alerts on those and 14 other top crypto coins, including Litecoin and Ripple.
The full list of coins you can track is Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Ripple, Ethereum Classic, Zcash, Monero, Dash, Stellar, Qtum, Bitcoin Gold, OmiseGo, NEO, Lisk, and Dogecoin”, Tenev added.
“We’re extremely selective about the cryptos we’re making available on the platform. We’re introducing those first because these are the most mature coins that people are trading these days. Multiple times people have declared them dead and they’ve come back stronger than ever.”
The expected surge of new customers may substantially expand beyond the 3 million users the broker currently has, as well as attract current Robinhood customers to the cryptocurrency market. The company surveyed its customers and 95% said they’d invest in cryptos if the product supported it.
The first U.S. states allowing BTC and ETH trading with the Robinhood app are California, Massachusetts, Missouri, Montana, and New Hampshire, starting in February.
In five years, Robinhood has raised $176 million from investors including Andreessen Horowitz, Index, and NEA that now value the company at $1.3 billion. Their business model is based on earning revenue by collecting interest on the cash and securities in Robinhood accounts, much like a bank collects interest on cash deposits. Moreover, ‘Robinhood Gold’ gives premium access in exchange of a monthly subscription of 6$.
Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash).