Is earning half of the revenue in the second quarter too good to be true? Robinhood is testing cryptocurrency wallet transfers, set to disrupt spot exchanges.

Robinhood has announced that it will soon test its in-development cryptocurrency wallet and transfer features, with some users able to participate in the testing as early as October, and a full launch expected next year. This will allow users to have ownership of their cryptocurrencies, enabling them to transfer them out of the app and potentially renaming its existing crypto trading platform. This move signifies that cryptocurrency exchanges will face strong competition in the future.

Robinhood Crypto Wallet

Robinhood announced that the crypto wallet will allow users to easily transfer crypto assets in and out of their Robinhood accounts. The company is working on creating a user-friendly and secure crypto wallet, claiming that even first-time users of blockchain transactions can easily navigate it.

The first group of users will start testing the crypto wallet in October, and Robinhood will regularly share user feedback on its blog and Twitter.

CEO Aparna Chennapragada mentioned in an interview that about 60% of Robinhood's 21.3 million active users are cryptocurrency users. The company will select some users to participate in the testing and provide feedback. Users can also join a waitlist to be considered for future expansions of the testing group.

50% of Revenue Comes from Crypto

According to the Q2 financial report, Robinhood generated $233 million in revenue from cryptocurrency in the second quarter, accounting for 52% of total transaction-based revenue. Among the $233 million, 62% came from Dogecoin transactions.

Seeing the trading capabilities of retail investors in the crypto market, Robinhood has been actively promoting cryptocurrency-related businesses, including launching a crypto dollar-cost averaging feature in September.

Reportedly, this dollar-cost averaging feature allows users to regularly buy cryptocurrencies on a daily, weekly, or monthly basis, known as Dollar Cost Averaging (DCA).

Robinhood emphasizes that dollar-cost averaging helps focus on long-term growth, reduces risks, eases buying pressure, and its zero-commission mechanism is more competitive than platforms charging 4% fees.

HOOD

Robinhood (HOOD) went public on 7/29 through a SPAC (Special Purpose Acquisition Company) listing, reserving 20% to 35% of the shares to be distributed to users on the platform through a lottery system.

This move received mixed reviews, with some brokerage platforms believing that retail traders are more volatile. The higher the percentage of retail investors holding, the more susceptible the stock price is to events like the GameStop short squeeze.

Ark Investment, on the other hand, is bullish on Robinhood similar to Coinbase, holding HOOD since its first day of trading and buying an additional $16.4 million worth of shares on 9/20. The stock has risen approximately 34% since its listing.