The very anticipated “fee free” trading toneelpodium from Robinhood has officially launched, providing more than Four million verhoging users with the capability to buy and sell Bitcoin and Ethereum without commissions. Is the toneelpodium indeed free, however?
Robinhood’s launch has undoubtedly generated hype. However, there are a number of potential issues with the podium that have largely flown under the radar of the crypto community. Robinhood announced the launch of their crypto trading service via their blog on the 22nd, promising users the capability to access their investments “commission-free, on one podium.”
Access to the Robinhood Crypto podium is stringently limited to users based ter California, Massachusetts, Missouri, Montana, and Fresh Hampshire at this point ter time, with the Robinhood “exchange” programma on releasing crypto trading functionality te more US states at a zometeen date.
Cryptocurrency trading on the Robinhood podium is live and rolling out to the very first set of customers commencing today. #DontSleep https://t.co/OqnVYkKeYL
Based ter Palo Alto, the US-based Robinhood app offers a broad range of stock brokerage services, and already offers market gegevens on 16 different currencies that include Bitcoin, Ethereum, Bitcoin Contant, Litecoin, and Ripple. The launch of Robinhood’s crypto trading features hase bot accompanied by massive hype levels, promising “fee-free trading.”
The launch includes a fresh “Crypto Feed” designed to foster market discussion
An announcement of the oncoming launch of their crypto trading solution ter late January, causing rente ter the Robinhood app to spike by almost 1 million users:
“Together, wij reached four million users and well overheen $100 billion ter transaction volume on our brokerage podium, leading to overheen $1 billion te commissions saved ter equity trades. With the release of Robinhood Crypto, wij’re continuing our mission of making the financial system work for everyone, not just the wealthy.”
The marketing and hype surrounding Robinhood’s crypto trading service, however, shows up to be based on poorly represented or misinterpreted information, trading crypto on Robinhood is more than likely not actually free.
How Does Robinhood Crypto Work?
Firstly, Robinhood is not an exchange. Robinhood co-founder Vlad Tenev outlined the specifics of the platform’s crypto functionality ter an vraaggesprek with CNBC last month, stating that Robinhood Crypto is not suggesting exchange services, but simply uses existing exchanges to facilitate trades, listing them ter aggregate via the Robinhood app ter what is introduced spil a loss leader promotion:
“We will connect to many exchanges, up to a dozen or more, overheen the next several months, Wij want to pauze even on this business, not to profit from it. Wij view this spil an chance to expand our customer base and give our customers more access to functionality.”
What this means for Robinhood crypto users is that trades performed via the Robinhood app are potentially not “fee-free”— they’re free of any extra fees from Robinhood, but are likely still subject to trading fees charged by the exchanges the trades are performed upon.
Whether or not Robinhood is able to access better trading fees or almost a no-fee rates at the exchanges it integrates with is not clear, but it’s very unlikely the toneel would willingly absorb the exchange fees associated with the volume Robinhood expects without passing them on to users.
Robinhood has also not yet provided any public information regarding which exchanges will be used to execute trades ordered via the Robinhood app, strafgevangenis have they detailed the rates at which they will be executing trades on their connected exchanges.
Users Cannot Withdraw Cryptocurrency
While the Robinhood Crypto launch may drive enhanced adoption and produce a positive influence on market values due to an increase te exchange-executed trades commissioned by their brokerage service, users that choose to purchase cryptocurrencies via Robinhood are severely restricted te terms of what they are actually able to do with their purchased crypto.
Robinhood has not provided any details on how cryptocurrency wallets will be managed, with several media reports indicating that a “third-party wallet provider” will be used to manage hot wallet funds. The lack of information on how hot wallet currency will be managed by the verhoging is certainly worth note.
The most nosey factor of the Robinhood Crypto service, however, is the fact that users are incapable to withdraw cryptocurrency, and cannot deposit cryptocurrency into their Robinhood account directly. It’s safe to assume, based on this fact, that Robinhood will not be providing users with access to their public wallet addresses.
Robinhood is catering to a market of Four million potential investors.
Robinhood has also flip-flopped on cryptocurrency withdrawal availability. Prior to the launch of the Robinhood Crypto service, the Robinhood Crypto FAQ stated that it wasgoed possible to withdraw crypto if sufficient ID requirements were met:
Yes. To get embarked with this process, you’ll need to send extra verification to customer support for security purposes. We’ll need a copy of:
- Your canap statements
- Two government issued IDs (gevelbreedte and back)
- A selfie with your ID
Keep ter mind, transfers and withdrawals can take up to one week. Any fees incurred te this process, such spil network and mining fees, will be passed along to you.”
The FAQ pagina now explains that it’s not possible to withdraw cryptocurrency holdings:
“At this time wij don’t support coin withdrawals, however, wij project to do so ter the near future.”
The same pagina also explains that it’s not possible to transfer existing cryptocurrency assets into a “Robinhood Crypto Account”. Waterput simply, the Robinhood Crypto service emerges to be a walled garden environment ter which users are able to “purchase” cryptocurrency assets that they don’t truly own ter the common sense of cryptocurrency, don’t control, and can’t withdraw.
Looking to the Future
While Robinhood may be brand fresh to the crypto space, clearly it has generated enough attention to be a potential worthwhile competitor to Coinbase. Te its early stage, it seems likely that Robinhood will proceed tweaking its product suggesting to be te the best interests of the crypto community and its users. Wij will wait with anticipation spil Robinhood’s product matures and works through its growing aches.
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DISCLAIMER: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken spil investment advice. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before making any investment decisions. Eventually, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.
Samuel is a freelance verslaggever, digital nomad, and crypto enthusiast based out of Bangkok, Thailand. Spil an avid observer of the rapidly evolving blockchain ecosystem he specializes ter the FinTech sector, and when not writing investigates the technological landscape of Southeast Asia.
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