Robinhood doubles crypto volumes, now pays 5% interest

Robinhood, a stock trading app popular with millennials, published its latest operating data release for October 2023, providing insights into user activity and market trends.

By the end of October, Net Cumulative Funded Accounts (NCFA) reached 23.3 million, up by around 30 thousand accounts compared to September 2023. Assets Under Custody (AUC) stood at $84.6 billion, slightly down by 2% from September 2023.

The no-fee app registered net deposits of $1.0 billion in October, with an annualized growth rate of 14%. Over the past twelve months, total net deposits amounted to $16.7 billion, indicating a 24% YoY incraese compared to October 2022.

In terms of trading volumes, October outperformed September 2023 in equities, options, and crypto. Stocks trading turnover reached $50.8 billion, a 15% increase. Options contracts amounted to 96.6 million, up 11%, while crypto volumes surged by 92% to $2.3 billion.

Meanwhile, Robinhood’s margin balances at the end of October totaled $3.5 billion, down 3% from September 2023. Cash sweep balances concluded October at $13.9 billion, witnessing a $0.3 billion (2%) increase compared to the end of September 2023.

Interestingly, Robinhood has increased the interest rate on uninvested cash balances for its best customers to 5% APY. This competitive rate, available to Gold customers with a $5 per month subscription fee, comes amid rising U.S. Treasury yields. With the new rate, users can generate returns by simply parking their money in savings accounts within the app-based brokerage firm.

For non-Gold customers, the interest rate on cash balances remains at 1.5% APY. These rates are applicable to customers participating in Robinhood’s brokerage cash sweep feature, which automatically moves uninvested funds into a separate deposit account. This feature leverages a network of six banks, providing FDIC coverage of $1.5 million per customer, surpassing the standard limit per bank of $250,000. Robinhood has also indicated plans to raise this coverage limit to $2 million on June 1.

The commission-free brokerage revealed earlier this month plans to expand its operations into the European Union and the United Kingdom, with intentions to launch crypto trading and a brokerage in these regions soon.

Despite these expansion plans, Robinhood’s third-quarter earnings report painted a mixed picture. Net revenue was reported at $467 million, falling below the expected $478.9 million but still showing a 29% increase from the same quarter the previous year.