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In a move that will significantly expand its cryptocurrency offerings, Robinhood is acquiring European cryptocurrency exchange Bitstamp, the popular US-headquartered stock trading platform announced on Thursday.
“The acquisition of Bitstamp is a major step in growing our crypto business. Bitstamp’s highly trusted and long standing global exchange has shown resilience through market cycles. By seamlessly coupling customer experience with safety across geographies, the Bitstamp team has established one of the strongest reputations across retail and institutional crypto investors," said Johann Kerbrat, general manager of Robinhood Crypto. “Through this strategic combination, we are better positioned to expand our footprint outside of the US and welcome institutional customers to Robinhood.”
This acquisition marks a major step for Robinhood in its quest to become a one-stop shop for all things investing, including cryptocurrencies. Robinhood has gained a large user base with its commission-free stock trades and user-friendly interface. However, the company has also faced criticism for its lack of customer service and its role in the GameStop stock market frenzy of early 2021.
Bitstamp, on the other hand, is a well-established player in the cryptocurrency exchange market. Founded in 2011, it is one of the oldest and most trusted exchanges in the world, known for its strong security measures and regulatory compliance. By acquiring Bitstamp, Robinhood gains not only a new customer base but also valuable licenses and regulatory approvals that could streamline its expansion into new markets.
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The move allows Robinhood to expand its cryptocurrency business globally and grow its customer base. While Robinhood is a popular platform in the United States, it has yet to make significant inroads into other markets. Bitstamp's established presence in Europe and other regions will help Robinhood bridge this gap.
The acquisition also gives Robinhood access to Bitstamp's licenses and regulatory approvals. As a regulated cryptocurrency exchange, Bitstamp operates under a number of licenses and approvals from various jurisdictions, including in Singapore, where it has an in-principle license from the Monetary Authority of Singapore. This regulatory framework will be crucial for Robinhood, which recently received a Wells Notice from the SEC in the US, as it seeks to expand its crypto offerings in a compliant manner.
In its Q1 2024 earnings report, Robinhood stated that almost 40% of its transaction-based revenue of $329 million came from crypto trading. This increase in volume led to a 232% increase in crypto-related revenue to $126 million, as the platform posted a net income of $157 million for the period.
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