Markets
Robinhood’s Bold Crypto Futures Plan: Expanding Amid Regulatory Scrutiny
Robinhood Markets Inc. is set to acquire Bitstamp next year for approximately $200 million. Before that deal closes, they are considering entering the cryptocurrency futures market. This could expand their offering in the U.S. as well as Europe.
Expansion to Europe and the USA
Robinhood is planning to use Bitstamp’s licenses to offer perpetual futures in Europe. According to anonymous sources, the commission-free trading app also intends to launch CME-based futures in the US for Bitcoin and Ether. Despite their importance, Robinhood is in no rush to launch these plans immediately, as stated by one of its spokespeople.
Earlier this year, the company acquired a futures brokerage license from Marex and despite receiving a Wells warning from the SEC, they have been expanding their crypto strategy and offerings. The warning is issued when the regulator plans to take enforcement action against a company.
Regulatory obstacles and competitive landscape
Robinhood has seen rapid growth and a significant increase in profits in the first quarter, but it faces regulatory scrutiny. Wells’ warning comes on the heels of the company’s strong earnings report. Competitors such as Coinbase Global Inc already offer derivatives services, and Robinhood’s entry into the space could increase competition.
Market dynamics and demand
The crypto derivatives market is much larger than the spot market globally. According to reports, the spot market trading volume on centralized exchanges was $1.58T, while the monthly derivatives volume reached $3.69T. Demand for futures has increased significantly since the approval of the US Bitcoin ETF. Robinhood’s potential offering could attract a new segment of crypto traders.
What to expect?
Despite the SEC sending Robinhood a Wells warning, they plan to close the $200 million deal to acquire Bitstamp early next year. This shows their plan to increase their market presence in the US and Europe by offering derivatives. The outcome of the regulatory hurdles and competition will shape Robinhood’s future in the cryptocurrency market.