Tear Down This Wall!
In a bold, iconoclastic move, Robinhood, the stock-trading mobile app provider, is demolishing the barrier between cryptocurrencies and traditional equities with the rollout of Robinhood Crypto in five U.S. states.
Account holders in California, Massachusetts, Missouri, Montana, and New Hampshire can now trade bitcoin and ethereum right alongside their traditional stock portfolios on the zero-fee mobile platform.
4 Million Equity Traders
Eventually all of the company's 4 million equity traders will have access to the crypto-universe, and according to CEO Vlad Tenev, the decision to add more coins in the future will be made by a listing committee and based on factors such as functionality, security, and demand.
Not Just The Wealthy
Robinhood also promises instant transfers on cryptocurrency purchases for amounts of $1,000 or less - "We're continuing our mission of making the financial system work for everyone, not just the wealthy" says Tenev.
The company also announced Robinhood Feed, a social-media-like platform for crypto-talk and a real-time watchlist which will allow investors to monitor 14 other cryptocurrencies - bitcoin cash, litecoin, XRP (Ripple), ethereum classic, zcash, monero, dash, stellar, qtum, bitcoin gold, omisego, NEO, lisk, and dogecoin.
Regs, Regs, & More Regs
Robinhood is regulated in the U.S. by the SEC and the Financial Industry Regulatory Authority (Finra), and the cautious policies spelled out on their website in careful language reflect this fact. "We currently don’t allow transfers of your existing cryptocurrency assets into your Robinhood Crypto account. Our primary concern is to prevent money from illegal activity being used for transactions."
The website also repeatedly highlights the difference between crypto and traditional equities by emphasizing "cryptocurrencies are not stocks and are not protected by the Securities Investor Protection Corporation."
Rotating Teams, Security Experts
Robinhood does not have its own wallet, so it will manage investors' crypto holdings using a combination of hot and cold storage with a third-party wallet provider. They seem to recognize and pre-emptively respond to widespread security concerns in light of all the recent media coverage focusing on exchange hacks.
The website says that coin transfers require authorization by select people on different teams - a selection that is continuously rotated for security purposes. They further emphasize that their safeguards are constantly being updated and tested by third party security experts.
What Took You So Long?
It's surprising to see cryptocurrencies finally listed and traded alongside their more traditional brethren in a single portfolio - but it's also surprising that a company whose mission since 2013 has been "the democratization of trading", took so long to embrace distributed ledger technology, which is, after all, the ultimate financial democratization tool.