Key Takeaways:
Popular American stock trading app Robinhood has reached a deal to purchase Bitstamp, a well-established cryptocurrency exchange, to become a major player in the broader crypto market.
According to a press release on Thursday, the $200 million all-cash deal is expected to close in the first half of 2025. It will need to gain regulatory approval from respective authorities before being finalized.
Robinhood Plans to Acquire Bitstamp Crypto Exchange to Expand Beyond the US
Johann Kerbrat, general manager of Robinhood Crypto – the crypto arm of the company, said Bitstamp is a highly trusted and long-standing global exchange that has shown resilience through market cycles. He also noted that with the acquisition, Robinhood is better positioned to expand its footprint outside the US and welcome institutional clients.
Barclays Capital and Galaxy Digital advised both companies in what is considered Robinhood’s biggest deal to date.
Bitstamp is a UK-based exchange founded in 2011 that soon became one of the largest crypto trading platforms in Europe. It supports spot trading of over 85 cryptocurrencies and offers other crypto products such as institutional lending and staking services. The company is highly regulated and holds more than 50 licenses and registrations worldwide.
On the other hand, Robinhood allows its users to buy and sell a limited number of crypto tokens, such as Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), Chainlink (LINK), and USD Coin (USDC) among others. Even though it is playing safe, the approach has made it difficult for the company to compete with established players in the broader crypto market.
Bitstamp Deal Could Establish Robinhood as a Major Player in the Crypto Market
However, the acquisition of Bitstamp could change all of that. By integrating the crypto exchange’s functionality, Robinhood can offer customers a wider range of crypto-related services and assets. Bitstamp reportedly has about 4 million retail and institutional clients, mostly situated in Europe, the UK, and Asia.
Robinhood launched its core stock-trading product in the UK last November and started offering crypto trading services in the EU shortly afterward.
The strategic partnership has the potential to establish Robinhood among international traders as a platform where they can manage traditional securities like stocks and options alongside their crypto portfolio.
JB Grafiteaux, CEO of Bitstamp, said that bringing Bitstamp’s platform and expertise into Robinhood’s ecosystem will enhance users’ trading experience with a “continuing commitment to compliance, security, and customer-centricity”.
The chief along with the rest of the leadership team will remain in their respective positions following the sale. Both companies informed customers that they can expect the same level of “service, security, and reliability” as they move forward with the deal.
The Bitstamp acquisition marks a significant step for Robinhood as it seeks to carve out a large piece of the cake that is the cryptocurrency market. The deal could propel the company into a leading position and expand its services to include more international retail and institutional clients. This could ramp up the competition in the niche market as Robinhood’s expansion threatens the likes of Coinbase, which is actively pushing to grow its influence outside the United States.
Robinhood Sees 40% Revenue Rise in Q1 2024 Following Growth in Crypto-Related Income
Robinhood has made significant gains in the sector, reporting a 224% year-over-year increase in crypto notional trading volume in the first quarter of 2024, while its overall revenue rose 40% to $618 million.
Most notably, the company’s transaction-based revenue has risen by 59% to $329 million, primarily driven by a 232% increase in cryptocurrency-related income that came up to $126 million. The Robinhood app has roughly 13.7 million active users in the US, UK, and Europe.
Vlad Tenev, the CEO and co-founder of Robinhood, said in an X post that he believes crypto will “fundamentally reorganize the financial system” and the acquisition of Bitstamp is part of the company’s efforts to accelerate this vision.
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