Popular mobile stock trading app Robinhood has officially rolled out the ability to buy cryptocurrencies in 5 states today.
The company says that residents in California, Massachusetts, Missouri, Montana and New Hampshire can buy or sell both bitcoin and ether using the Robinhood Crypto platform. The platform also allows investors to track 14 other cryptocurrencies, including bitcoin cash, litecoin, XRP, ethereum classic, zcash, monero, bitcoin gold and dogecoin.
Robinhood says in an announcement,
“Together, we reached four million users and well over $100 billion in transaction volume on our brokerage platform, leading to over $1 billion in commissions saved in equity trades. With the release of Robinhood Crypto, we’re continuing our mission of making the financial system work for everyone, not just the wealthy.”
However users have shown consfusionover whether or not Robinhood Crypto is an actual or exchange or if they simply place orders on existing exchanges. On a Robinhood support page they write,
“When placing market orders, we display the best available price on Robinhood Crypto, which is based on the exchanges we connect to.”
This statement suggest that they are executing trades on other exchanges (ie. GDAX, Binance etc…) instead of acting as a standalone exchange.
They go on to say that,
“You’ll never get charged a commission or additional trading fee on top of the execution price.”
This again suggest that they will not charge their own fee, but they will include the fees associated with the exchanges they are trading your money on.
While Robinhood Crypto will certainly introduce more fiat into to cryptocurrency market as a whole, the business model appears to be a little bit misleading, at least for now.
It’s also important to note that on their FAQ page, under “Can I withdraw my coins?” They write,
“At this time we don’t support coin withdrawals, however, we plan to do so in the near future.”
While we don’t anticipate any long term problems with the highly successful stock trading app, use caution when investing in Robinhood Crypto, at least until they allow for crypto withdrawals.