Why Robinhood Plans to Buy Crypto Exchange Bitstamp

The Californian neobroker Robinhood wants to take over the European cryptocurrency exchange Bitstamp for 200 million US dollars (about 184 million euros). The company announced this on Thursday. It is the largest takeover by Robinhood since the company was founded in 2013.

The agreement still needs to be approved by regulators. Robinhood expects the deal to close in the first half of next year.

With the takeover, “we are accelerating our plans for international expansion, especially in the crypto world,” said CEO Vlad Tenev on US stock exchange broadcaster CNBC. Part of Bitstamp is also a business unit with institutional investors, which is aimed at so-called market makers in crypto trading. These players bring buyers and sellers together and ensure that trading runs smoothly. Until now, Robinhood has focused primarily on US retail investors.

What Robinhood is planning

However, Tenev has been announcing ambitious growth plans for years. Robinhood is set to become a kind of super app through which customers can conduct a whole range of financial transactions, more than just trading stocks, options and cryptocurrencies. The company has already launched a commission-free trading app in the UK this year and offers a credit card in the US .

The stock was up six percent at the start of trading in New York. The stock is one of the big winners in 2024 and has gained 83 percent since the beginning of January.

The price was also driven by the boom in exchange-traded Bitcoin-Funds, so-called ETFs. These went on sale in the US in January and have triggered a new wave of euphoria in the broader crypto markets, which also drove up trading volumes on Robinhood.

Bitstamp is based in London and Luxembourg. The start-up, founded in 2011, has over 50 active licenses and registrations worldwide. This makes Robinhood a direct competitor to industry giants such as Binance and Coinbase. So far, Robinhood only allows its users to trade a relatively small number of digital currencies on its platform. However, users cannot transfer the coins from there to other platforms or accounts.

Tenev praised the clear framework for cryptocurrencies in Europe, which has been clarified by the so-called Mica regulation. “Unfortunately, Europe is ahead of the USA in this regard,” explained Tenev. In its home market, however, Robinhood is having trouble with the regulators: In May, the US Securities and Exchange Commission (SEC) warned that it could take legal action against Robinhood’s crypto trading platform.

The SEC suspects that Robinhood may have violated securities broker laws. Tenev’s company is not alone in this. SEC chief Gary Gensler, like US President Joe Biden and his Treasury Secretary Janet Yellen, is an outspoken critic of the crypto industry. The SEC has imposed a whole series of penalties and launched investigations in recent years, including against the largest American crypto exchange, Coinbase.

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(Featured image by Erling Loken Andersen via Unsplash)

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First published in Handelsblatt. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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