Robinhood Crytpo Wins License to Sell Bitcoin, Ethereum, Bitcoin Cash and Litecoin in New York

Crypto innovators and entrepreneurs are plotting a path toward mass adoption by continuing to work with regulators.

Today, Menlo Park-based Robinhood has been granted a cryptocurrency license and a money transmitter license by the New York State Department of Financial Services (DFS). Over the coming months, Robinhood Crypto, which is currently available in over 30 states, will allow account holders in New York to buy, sell and store seven cryptocurrencies, including Bitcoin, Ether, Bitcoin Cash and Litecoin.

Financial Services Superintendent Maria T. Vullo says,

“DFS continues to lead the way in responsibly supervising and advancing innovation in New York’s flourishing financial technology sector through a strong state-based regulatory regime.

Today’s approvals add to the growing list of responsible virtual currency providers who recognize and appreciate how a comprehensive regulatory framework fosters a competitive marketplace that benefits both consumers and industry.”

While the road to mass adoption for cryptocurrency has hit a number of snags and delays, efforts by US lawmakers and crypto innovators remain steady, with regulators and crypto entrepreneurs working together to lay critical pipelines and major on-ramps for a new digital economy.


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Author: Daily Hodl Staff
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Robinhood: How the Fast-Growing Stock Trading App Got Into Crypto

As been reported Sept. 6, stock and cryptocurrency trading platform Robinhood is planning to launch an initial public offering. Now the company is looking for a chief financial officer (CFO). Robinhood CEO Baiju Bhatt added that the startup is undergoing a spate of audits from the U.S. Security and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) in order to ensure regulatory compliance.

After raising $363 million in a series D funding round and $110 million in a series C round, Robinhood was valued at $5.6 billion, making it the second most valuable fintech startup in the U.S. Currently, there are reportedly five million users conducting trades with cryptocurrencies on the Robinhood platform. Let’s recall the path of a mobile startup to the promising position it now occupies.

What Robinhood is and how it works

Dubbed by the press as a “trading app for millennials,” before its involvement in crypto, Robinhood existed as a solely mobile application for stock trade. It had a plain and simple, user-friendly design, democratic deposit levels (i.e., aimed at under $1,000 users) and something much more revolutionary — a zero fee for trading the stocks. As the statement still goes on the official site main page:

“We believe that the financial system should work for the rest of us, not just the wealthy […] We’ve cut the fat that makes other brokerages costly, like manual account management and hundreds of storefront locations, so we can offer zero commission trading.”

That came as a revelation for the users that didn’t want to be charged from $1 to $10 a trade just to pay for overhead. Although, the simplicity came with some limits to functionality: Users could not short sell or trade mutual funds, options or fixed income instruments. As Investopedia notes, “research was limited to very basic pricing graphs and dates for corporate events, with the assumption that millennials, their target customer group, would find any data they need to make buying decisions on other websites.”

The iOS and Android apps were launched in 2015, now Robinhood allows trading from the desktop as well. Back in the early days, Techcrunch wrote about Robinhood’s integration ambitions, mentioning its collaboration with Stocktwits, Openfolio and Quantopian. As for now, the app doesn’t have a publicly available API but, according to the official site, is working to provide this in the near future.

The zero-fee app monetization mechanics

Robinhood business model involves earning interest on uninvested cash in customer accounts. Experts highlight that the app also pass through any regulatory fees that are incurred when a trade is placed: “These are typically fractions of a penny, but the firm rounds those fees up to the nearest penny.”

But the main source of income for Robinhood is margin trading — i.e., lending a money with an interest rate to the owners of Robinhood Gold accounts. The account minimum for Robinhood Gold, the broker’s “premium margin account,” is $2,000, which is a regulatory requirement that all brokers must follow. The user pays a fee every month for access to a set amount of margin loans, whether he/she uses the money or not, starting at $6/month for an additional $1,000. The monthly price rises with the account size and borrowing potential, going up to $200 per month for $50,000+ account sizes.

The company quest into crypto

In February 2018, Robinhood launched its no-commission cryptocurrency trading division with a signature, Tron-themed design. Originally, it had supported only Bitcoin (BTC) and Ethereum (ETH), with trading available for U.S. residents in California, Massachusetts, Missouri, Montana and New Hampshire. In July, the app has added support for Litecoin (LTC) and Bitcoin Cash (BCH) and then later, for Ethereum Classic (ETC) and Dogecoin (DOGE). Robinhood Crypto is currently available in 19 states of the U.S.

In the first four days of the Robinhood Crypto announcement, it had one million users signed-up. The company’s co-CEO, Vlad Tenev, told Fortune that the crypto division is not as much a source of profit as it is an important buildup to the company ecosystem:

“We don’t intend to make very much money on it at all for the foreseeable future […] We intend to operate it as a breakeven business […] The thinking behind that is what we’re really doing is building an ecosystem. Right now the products are investing products, so crypto slots in very nicely alongside the 10,000 plus other instruments that people can trade.”

While Robinhood allows traders to buy and sell crypto on the platform, users cannot transfer assets purchased on the platform to a third-party wallet. In June, rumors arose that Robinhood was going to launch a cryptocurrency wallet following a job advertisement for multiskilled cryptocurrency engineers posted by the startup. In the same month, “people familiar with the matter” told Bloomberg that Robinhood plans to obtain a banking license, with “constructive” talks with the U.S. Office of the Comptroller of the Currency to position itself as a banking services provider.

Company Profile

The job description fueled the attention to the product even more:

“What has been created so far only scratches the surface of how Robinhood envisions cryptocurrencies to play a role in our users’ lives.”

That caused a wave of interest in the crypto community, as users and media outlets shared their opinions about the hypothetical threat to the dominating crypto digital wallets, such as a market leader like Coinbase, which charges customers a two percent transaction fee or more for buying and selling cryptocurrency. Earlier, Robinhood co-founder and co-CEO Baiju Bhatt also expressed some serious ambitions:

“We expect by the end of the year to be either the largest or one of the largest crypto platforms out there […] We also really feel we’ll have the absolute best experience for investing in crypto as well.”

Company’s potential in crypto was also highlighted and backed by investments by venture capital firm Sequoia Capital. As stated by Sequoia partner Andrew Reed:

“Robinhood’s produce cadence has been very impressive […] [Sequoia Capital] invested because we think that Robinhood has the potential to bring its low-cost and user-first approach to revolutionize large portions of financial services.”

Remaining controversies

Robinhood isn’t immune to criticism. Aside from the alarmist Time note, focusing on the dangers of a simple design and careless enthusiasm of non-professional investors, the trading platform has been exposed for some flows, precisely as a stock market instrument. The most important is the lack of benefits for the large investors, as if the tool was only meant to satisfact the under-$1,000 accounts.

Investopedia notes that “Robinhood’s order execution engine does not seek out price improvement opportunities, which is something investors who trade large lots of 500 shares or more look for in a broker.” In some cases, the free transaction nature of Robinhood wouldn’t compensate the large investor for the absence of price improvement tools, which would made the app less attractive than its more conservative competitors.

Moreover, Fortune magazine warns that “like many tech startups planning to go public these days.” Robinhood is still losing money:

“The thing is, investors in IPOs are willing to tolerate losses as long as they will be turned soon enough into growing profits. And they’ve learned to distrust CEOs who talk cavalierly about losing money. Witness the downfall of Groupon after its manic growth failed to deliver profits, or Uber, which has had to retool its expensive global ambitions.”

Theresa W. Carey of Investopedia also calls attention to the threat that monetization necessarily poses to Robinhood’s core feature, the zero-fee transaction:

“At some point, those venture capitalists are going to want some return on their investment, and zero commission trading removes a major source of revenue. But free trades are the key feature Robinhood offers. They will have to generate revenue somehow.”

As for the digital currencies, the Robinhood Crypto app didn’t spark any substantial controversy, is still enjoying a good reputation and produces optimism in small investors who are tired of the transaction fees imposed by the established players. The level of attention to the company’s hiring announcements this summer showed that the market definitely welcomes new competitors and is interested in any chance of establishing closer ties with the traditional investment universe.


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Author: Stephen O’Neal
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Cryptocurrency Startup Swarm Is Selling Tokens Backed by Robinhood Shares

Cryptocurrency startup Swarm has an ambitious plan to democratize venture capital, and it has today taken a major step toward that goal by listing tokens that allow investors to purchase fractional shares in privately-owned fintech darling Robinhood.

No, Robinhood, a wildly-popular commission-free stock trading app that recently earned a $5.6 billion valuation, isn’t holding a security token offering (STO), nor has it even announced plans to make its shares available to the general public through a traditional public listing.

Those hurdles, however, did not prevent Swarm from finding a way to bring Robinhood shares to the public anyway.

Here’s how it works. Through partnerships with brokers and syndicate managers, Swarm has sourced equity from former Robinhood employees looking to cash out before the firm’s eventual IPO. That equity is held by what is essentially a shell company, whose shares are then listed on the Swarm platform as SRC-20 tokens.

All of this, Swarm says, can be accomplished without Robinhood’s permission — much less its willing participation. In fact, when the crypto startup first announced in June that it planned to turn Robinhood shares into cryptocurrency tokens, a Robinhood spokesperson told CCN that the firm was not even aware of Swarm. When reached for comment today, the firm provided the same statement and said that it had no further comment.

In any case, these tokens are now live on the Swarm platform, with a hard cap of $1 million in contributions.

“Secondary equities transactions and refinancing of legal entities which hold private company equity are not new in the United States. What’s new here is the tokenization of these assets, and the doors opened by this innovation,” said Philipp Pieper, CEO of Swarm Fund, in a statement.

He added:

“One of the key innovations of tokenization is that token owners can participate in the value creation of the very network they are part of. Swarm is bringing this paradigm shift to companies that are key players within this movement, but have yet to permit the network to participate.”

At present, though, that democratization of VC can only go so far. Due to regulatory concerns, Swarm tokens are restricted to accredited investors, who must demonstrate that they have a net worth of at least $1 million or an income above $200,000 ($300,000 combined if married) in each of the past two years and expect to meet that threshold in the present year as well. The firm has said that it hopes it will be able to make its products available to retail investors at some point in the future.

As CCN reported, Swarm has also announced plans to tokenize equity in other privately-owned tech companies such as Coinbase, Ripple, and Didi, though their shares have not been listed on the firm’s platform. Coinbase allegedly sent Swarm a cease-and-desist letter, but a Swarm spokesperson told CCN at the time that the company was confident that it would be able to proceed with its plans.


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Robinhood Lists Ethereum Classic (ETC) Day Before Rival Coinbase

US-based stock and crypto trading app Robinhood added support for Ethereum Classic (ETC) on Monday, just a day before rival Coinbase lists the coin on its platforms.

LIONBIT

“Starting today, you can invest in Ethereum Classic on Robinhood Crypto, commission-free,” an official blog post read.

The ETC option, taking the number of digital assets listed on the platform to six, is available to traders in the 19 US states with access to Robinhood Crypto, the company added.

The crypto trading platform was launched in February with support for Bitcoin (BTC) and Ethereum (ETH). In recent months, Robinhood, which achieved a $5.6 billion valuation in May at the conclusion of its $363 million Series D funding round, expanded the range of supported cryptocurrencies, listing Bitcoin Cash (BCH), Litecoin (LTC), and Dogecoin (DOGE).

Notably, Robinhood users can also monitor market data, read cryptocurrency news and create price alerts for 10 other coins — Ripple (XRP), Monero (XMR), Bitcoin Gold (BTG), Dash (DASH), Lisk (LSK), NEO (NEO), OmiseGO (OMG), Qtum (QTUM), Stellar (XLM), Zcash (ZEC). Considering the company’s ambitious expansion plans and steep development since the start of the year, the aforementioned assets are also possible future additions to the trading service.

One step ahead of rival Coinbase

Robinhood’s decision to list Ethereum Classic follows a similar announcement by Coinbase. The rival company revealed last week that it had begun final testing for the cryptocurrency and will begin accepting transfers in ETC on Tuesday, August 7.

Robinhood, which is a strong competitor to Coinbase in the US market, must have decided to step up its development effort for adding ETC so that it could have its support ready before Coinbase.

Robinhood co-founder and co-CEO Baiju Bhatt said in an interview with Fortune earlier this year that the company plans to bolster its cryptocurrency trading service and outstrip Coinbase, which currently has around 20 million users. Bhatt remarked that, unlike its main competitor, Robinhood is already a registered broker-dealer with the Securities and Exchange Commission (SEC).

“We expect by the end of the year to be either the largest or one of the largest crypto platforms out there,” Bhatt said.

TIP

ETC price on the up

The flurry of listing announcements has boosted the price of Ethereum Classic. Over the past few days, ETC jumped from around $14 to over $18, representing a 28% gain. Now the coin has officially surpassed the market cap of NEO and Monero, currently ranking as the 12th-largest digital currency, with a market capitalization of $1.9 billion, according to Coins.Online data.

In the past 24 hours, ETC has gained just over 6% to trade at $18.28. The coin’s hike came amid a generally subdued crypto market, where most assets remained in the red throughout the day.


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Litecoin, Bitcoin Cash Are Latest Crypto Additions to Robinhood Investing App

U.S.-based mobile stock trading app Robinhood has added two new cryptocurrencies to its no-fee trading service.



The company said in an announcement on Thursday that litecoin and bitcoin cash have been added for Robinhood Crypto users following strong demand from customers for crypto assets beyond the current options of bitcoin and ethereum.

As part of the announcement, Robinhood also claimed it now has over 5 million users on the platform following expansion of its crypto trading service to 17 U.S. states.

The news follows a report in May that Robinhood raised $363 million in a Series D funding round, which the company said would allow it to offer more crypto trading pairs in more markets in the U.S.


At the time, Robinhood Crypto was available in 10 states. Since then, crypto trading has been opened up across Utah, Virginia, Pennsylvania, Arizona, Indiana, New Jersey and Texas.

The company’s co-founder and co-CEO Baiju Bhatt previously said he expects Robinhood Crypto to be able to cover the entire U.S. by the end of 2018 as part of a plan to become one of the largest cryptocurrency platforms.

As previously reported by CoinDesk, Robinhood launched the crypto trading service in February, offering bitcoin and ethereum trading pairs in five states.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Robinhood Is Going Deeper Into Crypto — And It Could Take a Big Chunk Out of Coinbase’s Flagship Business

Robinhood, the California brokerage known for its free stock trading application, is expanding its foothold in the crypto world. 
  • Certain Robinhood users have been able to buy crypto since the beginning of 2018. 
  • Now, it is hiring developers to build a crypto wallet, according to a job advertisement. It is also looking to support trading in new coins.
  • Such a product would make it a stronger rival to Coinbase, the cryptocurrency exchange and broker, experts say. 


Robinhood, the California broker known for pioneering free stock-trading, is looking to dive deeper into the market for digital currencies. And Coinbase, one of the largest platforms for crypto trading, should be worried, market observers tell Business Insider.

Robinhood, which rolled out a cryptocurrency trading offering earlier this year in some US states, is looking to hire developers to build-out a cryptocurrency wallet, according to a job advertisement.

Such an offering would allow investors to transfer their crypto holdings from outside brokerages and wallets into Robinhood. Currently, if a Robinhood crypto customer wants to transfer coins in and out of the platform they would have to first sell them, transfer the money to another platform, and then buy.

A spokesman for Robinhood declined to provide a timeline on a wallet offering, but said “people are constantly asking for the ability to transfer their coins into Robinhood.”

In addition to providing an on-ramp for Robinhood users to send coins from elsewhere, the wallet could also provide a more secure way for Robinhood customers to store their crypto under the same company umbrella.

Robinhood doesn’t charge customers to trade bitcoin or ether on its platform, versus Coinbase which charges customers a 2% transaction fee or more for buying and selling cryptocurrency. Robinhood isn’t the only firm undercutting Coinbase. Circle, the Boston-based fintech firm, rolled-out Circle Invest which also doesn’t charge a fee. To be sure, Coinbase operates a much larger business outside its retail brokerage. It operates an institutional-grade exchange and has been developing more and more products aimed at Wall Street.

“If you are trying to attract large holder folks onto the platform, then [lack of fees] is one way to do it,” said Warren Hogarth, the founder of fintech firm Empower, said in an interview.

Coinbase declined to comment for this story. The firm has previously defended its fees by pointing out customers can move physical bitcoin in and out of its platform. Robinhood doesn’t currently offer that functionality but soon could if they successfully roll out a wallet.

“For any customers who’s buying or selling bitcoin or any cryptocurrency on Coinbase, they will have access to send and receive their coin, which we believe is a core piece of functionality. As a result of that we do charge fees,” Dan Romero, the general manager of Coinbase, told the Wall Street Journal.

 

New challenges for Coinbase

Robinhood is also interested in supporting the trading of new coins onto the platform, the job ad suggests. The addition of news coins and a wallet could better position them against Coinbase, which is reported to have made $1 billion in crypto revenues last year.

The bull-run of 2017 helped Coinbase build a massive business around their brokerage unit. But increased competition presents “a pretty significant threat for their core bread and butter,” said Michael Dunworth, the founder of crypto firm Wyre.

“Not only is it hyper-competitive from traditional fintech,” he said, “add the [international exchanges] to that and it starts looking like a tough market for Coinbase.”

In November, Japan-based Bitflyer announced it was opening shop in the US. Dunworth expects other foreign crypto exchanges to expand into the US.

As for Robinhood’s crypto future, the job ad makes it clear that the firm’s ambitions lay beyond their current product offering.

“What has been created so far only scratches the surface of how Robinhood envisions cryptocurrencies to play a role in our user’s lives,” the ad said.

Still, Robinhood has made it clear that it views crypto as a gateway to its equities and options businesses, rather than a money-maker in itself.

“We are going to break-even on this,” Robinhood cofounder Baiju Bhatt said in an interview with Business Insider in January. “But it could dramatically increase user growth.”


Here at Dollar Destruction, we endeavor to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!
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Author:  Frank Chaparro
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