Robinhood is rolling out a feature that gives traders more control over digital tokens in its latest expansion into the cryptocurrency space.
The new public brokerage is testing “crypto wallets” with selected clients next month, the company said in a blog post on Wednesday. The so-called wallet will allow investors to trade, send and receive digital currencies, as well as move them in and out of the Robinhood app.
Over the past few months, some users – notably Dogecoin traders – have complained on social media that using Robinhood as a broker, they are exposed to crypto prices, but do not have actual ownership of the coins themselves – same.
“We’re not the first to market – we take our time to make sure it’s done in a phased fashion,” Robinhood’s chief product officer Aparna Chennapragada told CNBC in a telephone interview. “We’ll have customers who come in, iterate on the product, get customer feedback, and then grow from there. “
Some customers will start testing the product and Robinhood will share their comments on its blog and Twitter, said Chennapragada, who spent 12 years in Google’s product, engineering and design teams before joining Robinhood. The deployment will eventually allow customers to join the waiting list.
Robinhood’s Growing Crypto Business
The startup introduced cryptocurrency trading three years ago, but it has become increasingly important to the company’s bottom line. In the last quarter, more than half of Robinhood’s transaction-based revenue came from cryptocurrency trading, down from just 3% a year ago.
The new wallets will allow customers to consolidate their digital coins into one account. Customers can then trade, send, and receive cryptocurrencies to and from other wallet addresses. Rivals Coinbase and Gemini already offer this feature. Bloomberg News first reported on Robinhood’s plans to roll out this feature in the beta of the trading app.
Bitcoin and other cryptocurrencies have seen high volatility since bitcoin’s all-time high in April amid growing regulatory concerns.
The cryptocurrency plunged with the broader market on Monday, with bitcoin ending the day down nearly 7%. The slide reignited the debate on whether or not bitcoin can function as a safe haven asset. In recent years, bitcoin has shown a downward trend with the larger markets.
Robinhood also said that a new feature to set up recurring crypto investments was live on the app on Wednesday. Customers can schedule a crypto purchase, with no commission, for as little as $ 1.
The broker’s move comes as cryptocurrencies come under closer scrutiny by the Securities and Exchange Commission, especially Chairman Gary Gensler. Gensler last week assured lawmakers that leading Wall Street regulators were working overtime to create a set of rules to monitor volatile cryptocurrency markets while balancing the interests of U.S. innovators.
“Currently, we do not have adequate investor protection in crypto finance, issuance, trading or lending,” Gensler said in prepared remarks to the Senate Banking Committee. “Frankly at this point it’s more like the Wild West or the old world ‘buyer beware’ that existed before the securities laws came into effect.”
Robinhood said the crypto wallet will have several security features including identity verification, multi-factor authentication, and email and phone verification to protect coins from hackers.
Chennapragada said, “We are fully engaged with our regulators and the SEC to ensure that we are working on this point with educational tools, for the sake of safety. It’s great for the customers. “
Robinhood shares rose 2% in pre-market trading on Wednesday.