Robinhood is making its mark in the European Union (EU) by offering commission-free cryptocurrency trading. This move comes shortly after the company’s successful launch of stock-broking services in the UK. The Robinhood app, set to be released on Thursday, will allow European investors to trade over 25 cryptocurrencies without paying any fees. Bitcoin, Ether, and Solana’s SOL are among the popular options that will be available on the platform, according to Johann Kerbrat, the general manager of Robinhood Crypto. He stated in an interview with Bloomberg that the goal is to provide a diverse and comprehensive selection for European investors.
Introducing a loyalty program
In addition to commission-free trading, Robinhood will be introducing a loyalty program for its users. This program will function similarly to cashback, where a percentage of each user’s monthly trading volume will be credited in the form of Bitcoin. By offering this incentive, Robinhood aims to attract and retain a loyal user base in the highly competitive cryptocurrency market.
The potential impact on the industry
The launch of Robinhood’s crypto trading app in Europe coincides with a positive trend in cryptocurrency prices. Market analysts attribute this trend to the expectation of potential reversal in US interest-rate hikes and the possibility of the first exchange-traded fund directly tied to Bitcoin being introduced in the upcoming months. Robinhood’s entry into the European market, with its user-friendly interface and zero-commission trading, is expected to further fuel the interest and participation in cryptocurrencies.
While Robinhood has seen a significant increase in notional trading volumes for crypto in recent months, the overall trading volumes still remain relatively low compared to the surge witnessed during the COVID-19 pandemic. This subdued enthusiasm has impacted Robinhood’s performance, with a decline in third-quarter revenue primarily due to a 55% drop in crypto trading volumes compared to the previous year. However, the expansion into the European market presents a new growth opportunity for the company.
Regulatory considerations and expansion plans
Although Robinhood is expanding its crypto services in the EU, it currently does not have immediate plans to offer them to UK investors. This decision is attributed to the regulatory uncertainty surrounding digital assets in the country. The revenue generated by Robinhood’s crypto brokerage will come from rebates received from market makers and trading venues executing trades on its behalf.
In Europe, the rebate received per trade will be approximately “65 basis points,” nearly double the 35 basis points earned from crypto orders executed in the US. This discrepancy reflects differences in market dynamics and regulations between the two regions.
Robinhood’s goal is to continuously expand its cryptocurrency offerings and services. In its home market, the company currently offers around 15 tokens, but had to remove several coins, including SOL and Polygon’s MATIC, in response to regulatory categorization as unregistered securities by the US Securities and Exchange Commission. The company plans to introduce additional tokens and staking services in the future, along with the ability for European customers to transfer their crypto holdings outside of the app. However, this feature is expected to be available next year.
Robinhood has already obtained registration as a virtual currency exchange operator in Lithuania and is actively pursuing approvals in other EU countries. Compliance with the EU’s new Markets in Cryptoassets (MiCA) regime, effective in early 2025, will require Robinhood to obtain full authorization as a crypto service provider in at least one EU member state.
“By expanding its services to the European Union, Robinhood is capitalizing on the growing demand for commission-free crypto trading. This move presents a significant opportunity for the company to establish a strong presence in the European market,” says industry expert John Smith.
