Robinhood, the US-based neo broker which has been under fire amid the GameStop trading frenzy in late January, is celebrating a massive adoption of cryptocurrency trading on its specialized platform, Robinhood Crypto.
Robinhood Crypto was launched three years ago and “has been central to our efforts to expand access to financial services and democratize finance for all”, the broker stated. The platform currently offers seven tradeable coins: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, and Litecoin.
The broker’s cryptocurrency trading platform has seen six million new customers joining the club in 2021 so far. The monthly average of new customers trading on Robinhood Crypto was about 200,000 customers during 2020.
The average transaction size is around $500 so far this year. About two times the average figure in 2020.
Robinhood CEO Calls for Shorter Settlement Cycle
The restrictions to the trading of certain stocks amid the extreme volatility experienced during the ‘meme stocks’ trading frenzy have weakened the broker’s branding of an agent for the democratization of trading.
The business model, based on payment for order flow, has led to accusations of conflict of interest and even conspiracy against its customers. Robinhood CEO Vlad Tenev has blamed the current settlement cycle for U.S. equities for the disruption.
A significant number of high-profile names within the industry, headed by nearly disgraced US-based neo broker Robinhood, have called for a shorter settlement cycle for U.S. equities: one business day after the trade is executed (T+1).
The extreme volatility and the high deposit figures required by Robinhood’s settlement partner forced the broker to take action, including restricting the trading of the stocks most exposed to the social media trading mania.
DTCC has released a paper, “Advancing Together: Leading the Industry to Accelerated Settlement”, which states that moving to a T+1 settlement cycle can lead to cost savings, reduced market risk, and lower margin requirements.
Robinhood challenging Coinbase?
The timing of Robinhood’s announcement – 6 million new cryptocurrency trading account holders in 2021 – is interesting, to say the least. Coinbase has just filed with the Securities Exchange Commission to go public. Coinbase intends to list its Class A common stock on the Nasdaq Global Select Market under the ticker symbol “COIN”.
The US-based cryptocurrency venue is one of the largest and regulated crypto operations in the world. The initial public offering is likely to be a new milestone for the virtual currency ecosystem which was dismissed by the trading industry for many years until the phenomenon became too big to ignore.
If Robinhood continues the current route of onboarding millions of clients every month for its cryptocurrency trading service, Coinbase will definitely have a challenger to fear.