- Robinhood, the US-headquartered commission-free brokerage has expanded its footprint with a $200 million cryptocurrency acquisition in Europe.
- Robinhood has acquired Bitstamp a European cryptocurrency exchange that was founded in Slovenia in 2011.
- The exchange offers markets in 101 instruments, that range across Cryptocurrencies, NFTs, Stablecoins and Defi Protocols.
Why would Robinhood aquire Bitstamp?
Bitstamp is a longstanding exchange (perhaps even the world’s oldest crypto marketplace) with an established customer base, which should allow Robinhood to scale up its cryptocurrency business, both in terms of its volumes and geographical spread.
Bitstamp has both retail and institutional customers, something that Robinhood has not had access to before.
The exchange holds 50 active licenses and registrations globally, something that is unusual in itself, in a sector that’s historically been seen as regulatory wild-west.
Johann Kerbrat, Robinhood Crypto’s General Manager said of the takeover:
“Through this strategic combination, we are better positioned to expand our footprint outside of the US and welcome institutional customers to Robinhood.”
Problems at home
Robinhood may also be looking to diversify away from its core US market where it has grown rapidly and achieved a certain amount of notoriety.
The SEC or Securities and Exchange Commission, the principal US securities regulator, recently served Robinhood with a Wells Notice telling the company that it could sue Robinhood for violating securities laws, through some of its existing cryptocurrency trading.
The Wells Notice does not guarantee that the SEC will take enforcement action against the recipient. Rather it’s a warning that the SEC is considering its next steps.
For its part, Robinhood believes that it has not broken the rules and said it looked forward to engaging with SEC on the matter.
First quarter growth
Robinhood enjoyed a buoyant first quarter with revenues of $618.0 million, up +40.0% year over year.
With customer deposits of $11.20 billion up +44.0%, including deposit transfers from all of its major rivals.
Alongside a +42.0% jump in the number of Gold subscribers (the firm’s premium account tier) who now number 1.70 million customers.
The jump in Q1 revenues was possible thanks to a resurgence in cryptocurrency trading which generated $126.0 million in revenues alone.
A rise of + 232.0%, from the same quarter the previous year.
What’s more, Robinhood reduced its operating expenses by -52.0% year over year.
The jump in cryptocurrency revenue from Robinhood’s existing activities would have made the opportunity to acquire Bitstamp almost too good to miss.
And given the levels of interest and excitement around cryptocurrencies right now the timing of the transaction looks good too.
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