Robinhood Outlines Bold Crypto Services Plan, Raises USD 363 Million

The company aims to overtake rival Coinbase through US-wide expansion and new offerings

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11 May • 2.5 min
In Markets

US-based stock trading app Robinhood has raised USD 363 million in a venture funding round to expand its cryptocurrency platform, the company said on Thursday.

According to its press release, the Series D funding round values Robinhood at USD 5.6 billion, up from USD 1.3 billion just over a year ago. The investment was led by venture capital firm DST Global, with participation of new investors Iconiq, Capital G, Sequoia Capital, and KPCB, as well as existing investors NEA and Thrive Capital. In its announcement, Robinhood said the new funds will be spent on product expansion, infrastructure and operation improvements, as well as talent acquisition.

In an interview with Fortune, Robinhood co-founder and co-CEO Baiju Bhatt specified that the company plans to bolster its cryptocurrency trading service Robinhood Crypto and outstrip its existing rival Coinbase, which currently has around 20 million users. Bhatt remarked that, unlike its main competitor, Robinhood is already a registered broker-dealer with the Securities and Exchange Commission (SEC).

“We expect by the end of the year to be either the largest or one of the largest crypto platforms out there,” Bhatt said.

Robinhood launched its commission-free Robinhood Crypto service in February. Currently, the platform is available in 10 US states and allows users to trade Bitcoin (BTC) and Ethereum (ETH), while also track market data for a total of 16 cryptocurrencies. Bhatt expects the offering to roll out country-wide by the end of 2018. He also revealed plans to launch other cryptocurrencies for trading.

Robinhood’s ambitious goals announcement comes on the heels of recent reports that major Wall Street institutions also plan to enter the digital assets trading market, thus increasing competition in the sector. Investment banking giant Goldman Sachs announced last week it will be opening a crypto trading desk “within weeks” while media reports from Monday suggested that ICE, the parent company of the New York Stock Exchange (NYSE), is considering offering BTC swap contracts.

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Crypto’s commission-free model differs it from its competitors. The company profits from its subscription service Robinhood Gold (with premium features such as margin trading and extended market hours), and by collecting interest on deposits. This kind of revenue streams allows the company “offer things like crypto for free,” Bhatt noted.

During the launch of Robinhood Crypto, co-founder and co-CEO Vladimir Tenev told TechCrunch: “We’re planning to operate this business on break even basics and we don’t plan to profit from it for the foreseeable future. The value of Robinhood Crypto is in growing our customer base and better serving our existing customers.”