Vlad Tenev, CEO of Robinhood Markets Inc HOOD, was asked about the performance of the cryptocurrency market, specifically regarding Bitcoin BTC/USD and Ethereum ETH/USD, during the third quarter earnings call on Tuesday.
What Happened: He acknowledged that while there has been stronger performance in these cryptocurrencies, the volume trends have remained relatively subdued both industry-wide and on the Robinhood platform.
"I think it’s hard for me to speculate on activity predictions and the broader cryptocurrency market. We’re focused on using this as an opportunity to build our capabilities, build the platform. You’ve heard me talk in this call about how we want to make sure customers who are using Robinhood for crypto know that they’re getting terrific pricing. And so we’ve continued to make progress there," Tenev said.
Tenev also mentioned that Robinhood’s team is working on the launch of their services in the European Union (EU), which is expected to significantly expand the market of customers they can serve.
In response to another question about the delisting of certain crypto assets by Robinhood, Tenev emphasized that regulatory clarity plays a crucial role in decision-making. In June, the trading platform announced that it will cease support for three prominent cryptocurrencies: Cardano ADA/USD, Polygon MATIC/USD, and Solana SOL/USD.
John Todaro, Principal, crypto and blockchain research at Needham & Company asked Tenev, "What would give you comfortability to relist some? Is it some of these ongoing suits maybe with Coinbase that need to get resolved? Any clarity there?"
"It’s hard to say what specifically we’re waiting for to give us comfort. I think that rules — rule-making court case data, that all helps. And of course, we’ll continue to push for regulatory clarity because I think it would be a shame for the innovation that we’ve been seeing in crypto to be co-opted overseas. I think it’s very, very important for the US to remain a leader in every new technology in the industry that we possibly can,” Tenev responded.
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Why It Matters: Regarding the EU’s clearer regulatory framework for crypto, Tenev did not provide specific details about the products or services that Robinhood plans to offer. However, he affirmed that with regulatory clarity, the company expects to provide a different set of assets and capabilities in Europe compared to the US.
During the call, Tenev also highlighted the upcoming launch of brokerage operations in the U.K., which will replicate the commission-free trading model that Robinhood successfully implemented in the U.S.
Jason Warnick, CFO at Robinhood added, "Two major things are happening in the coming weeks. First, we’ll launch brokerage operations in the UK. We look forward to eliminating commissions in that market, just like we did in the US. Also in the coming weeks, we will launch crypto trading in the EU."
Robinhood reported a decline in its crypto trading revenues during the third quarter of 2023. Transaction-based revenues on cryptocurrencies fell to $23 million, marking a significant 55% drop from the previous quarter. This downward trend in revenue was particularly pronounced in the crypto segment, with equities transaction revenues also experiencing a 13% decline quarter over quarter.
The company’s crypto trading revenues had already faced a slight decline earlier in the year, starting at $38 million in the first quarter, followed by a drop to $31 million in the second quarter.
Photo via Shutterstock.
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