After a tough first quarter, investing app Robinhood is doubling down on new product launches, particularly in its crypto unit, in hopes they will help support the business. CEO Vlad Tenev today announced the company’s plans to roll out non-custodial crypto wallets at the Permissionless DeFi conference in Florida.
The market environment posed challenges for the company as trading volumes plummeted. Robinhood’s net revenue fell 43% to $299 million in the first quarter, with crypto trading revenue specifically dropping 39% to $54 million (meaning crypto trading accounted for approximately 18% of Robinhood’s total revenue by the end of March).
Robinhood has been actively developing its crypto branch since the end of the first quarter with the aim of attracting users and increasing trading volume. Over the past month or so, the exchange has rolled out custodial crypto wallets for its users, listed four new coins, including Solana and Shiba Inu, and announced that it will integrate with the Bitcoin Lightning Network to enable faster transactions and less expensive.
22 million customers interact with its crypto products today, Robinhood CTO Johann Kerbrat told TechCrunch in an interview. With a custodial wallet, Robinhood holds the private key on behalf of a user, which means users can invest in crypto by tracking its price movements, but they cannot directly transact with their crypto funds.
Now that it is launching a noncustodial wallet, users will be able to access and manage their own digital assets, including cryptocurrencies and decentralized applications (dApps), including NFTs, Kerbrat said. Kerbrat sees two key areas of differentiation for Robinhood’s noncustodial wallet: its user-friendly design and its no-cost setup for customers.
The waitlist for the wallet will be launched next week and the rollout will begin in late summer, he added. The company’s goal is to make the wallet available to all users worldwide by the end of 2022.
Coinbase, another popular crypto exchange, also offers two types of wallets – custodial and non-custodial – in two different apps, the latter being Coinbase Wallet. Coinbase Wallet is free but passes individual transaction fees on to its users.
Robinhood, on the other hand, will not charge its customers any fees for using its non-custodial wallet, including network fees for trading and crypto exchange, Kerbrat said.
The Robinhood noncustodial wallet, which Kerbrat says has yet to be officially named, will operate as a standalone app. In addition to allowing users to store NFTs in the wallet, it will also serve as a connectivity point to the decentralized finance (DeFi) ecosystem, giving customers access to DeFi protocols through which they can earn a return on their coins by lending or staking them, Kerbrat said.
To create an account, users won’t need to share any personal information with the exchange unless they choose to connect their non-custodial wallet to their Robinhood app, he added.
“We want to make sure that there is always a good link between the two products. If you want an on-ramp or off-ramp from fiat to crypto, you can use Robinhood, but you don’t have to,” Kerbrat said.
Kerbrat hopes today’s announcement will encourage dApp developers and protocols to integrate with Robinhood’s portfolio.
“We still think the main reason a lot of people don’t use non-custodial wallets is that it’s too complicated plus fees everywhere. And so we don’t just want to do a project – we really want to help understand what is happening and integrate dApps.
Shares of Robinhood soared more than 20% last week after FTX, a crypto exchange run by billionaire Sam Bankman-Fried, revealed it had purchased a 7.6% stake in the company. The stock was trading around $10 per share as of noon EST Tuesday, still significantly below its 52-week high of $85.