Robinhood, a US brokerage firm and fintech known for its trading app that allows users to trade stock and some notable cryptocurrencies like Bitcoin (BTC), Ether (ETH), and Dogecoin (DOGE), has announced plans to expand its crypto trading services to the European Union.
The commission-free trading app made the announcement during its third-quarter earnings call, where it also reported a 26% year-on-year fall in crypto trading revenues. Robinhood linked the revenue decline to reduced cryptocurrency trading volumes on its platform.
Back in June, the US Securities and Exchange Commission (SEC) flagged several cryptocurrencies as securities and sued Binance and Coinbase for selling these tokens to retail investors. Fearing a probable enforcement action, Robinhood ceased support for Cardano (ADA), Polygon (MATIC), and Solana (SOL).
Currently, the exchange allows users to buy, hold, and sell BTC, ETH, DOGE, Shiba Inu (SHIB), Avalanche (AVAX), Litecoin (LTC), Uniswap (UNI), Chainlink (LINK), Stellar (XLM), and Aave (AAVE).
Robinhood Reports Increased Net Revenues But Declined Profit From Crypto Activities in Q3 2023
The brokerage reported net revenue of $467 million, a year-over-year increase of 29%, as a result of higher net interest and other revenues that were “partially offset by lower transaction-based revenues”. However, the figure was slightly less than the $478.9 million in net profit that analysts were expecting the company to return in Q3 2023.
While the fintech’s net interest revenues increased 96% year-on-year to $251 million due to growth in interest-earning assets and higher short-term interest rates, its transaction-based revenues declined by 11% year-on-year to $185 million. Robinhood said the revenue slump was largely due to a 55% decrease in cryptocurrency notional volumes over the year.
The company received $23 million in revenue from crypto-related transactions, down 11% from $31 million it reported in Q3 2022. Meanwhile, options remained unchanged at $124 million, and equities diminished 13% to $27 million in the latest quarter.
Robinhood reported a net loss of $85 million, with earnings per share (EPS) standing at -$0.09. However, the numbers are better off than when the brokerage suffered the sharpest drop-off in its share price following the events of the crypto bear market, plummeting from a peak of $55.01 in August 2021 to $7.19 in July 2022. The company reported a net loss of $175 million in Q3 2022.
Robinhood Reveals Plans to Expand Crypto-related Services to Europe
Despite the decrease in crypto trading activity, Robinhood appears to be ambitious with its plans for expanding crypto-related services overseas. With the brokerage entering the European market, it will be in direct competition with US-based crypto exchanges such as Coinbase and Kraken, which already have a stronghold within the Bloc. While Coinbase holds a virtual asset service provider (VASP) license in Italy, Spain, France, Ireland, and the Netherlands, Kraken is authorized to offer its services to customers in Spain and Ireland.
Robinhood CEO Vlad Tenev said that he hopes the exchange will be able to offer “hundreds of millions” of crypto traders across Europe a “different set of assets” with greater regulatory clarity. Although not much information regarding its expansion plans was revealed, the earnings report suggested that the company plans to launch brokerage operations in the UK and crypto trading services in the EU “in the coming weeks”.
Robinhood’s European crypto business will fall under the upcoming Market in Crypto Assets (MiCA) bill, which is expected to go into effect in April 2024.
Robinhood Brought Back $600 Million Worth of Shares Owned by Sam Bankman-Fried
The zero-commission fee trading platform made headlines earlier this year after it brought back 55 million shares from crypto conman Sam Bankman-Fried. The founder of the collapsed FTX crypto exchange had purchased the shares through an affiliated firm called Emergent Fidelity Technologies.
After the company declared bankruptcy alongside FTX and Alameda Research in November 2022, these shares, considered to be SBF’s assets, were seized by the US Department of Justice. Robinhood brought the shares worth $600 million from the United States Marshall Service in January.
Robinhood shares comprised a large percentage of Bankman-Fried’s assets when he was arrested last December. The disgraced former crypto billionaire had to surrender all his assets following convictions of financial fraud. Last week, he pleaded guilty to seven counts of wire fraud, money laundering, and securities fraud that will see him serve 110 years in prison.