Robinhood, an investing app, has extended its cryptocurrency trading service to Europe. However analysts warn that the market is crowded.
Platform supports 25 crypto assets. The company announced on Thursday that customers will receive a Bitcoin rebate each month based upon a percent of their overall trading volume.
Owen Lau, executive director at Oppenheimer & Co., called the EU “a competitive market” — noting existing players serving the region include Bybit, OKX, Kraken, Coinbase, eToro, Crypto.com and Binance.
He said that after the failure of FTX, a crypto exchange, last year and Binance settling with the US Department of Justice some users may move their funds to a more reputable site.
Robinhood announced in its blog on Monday that it had chosen to accept the Robinhood dividend. “a more conservative approach” When it comes to digital assets, we support them better than our competitors.
“[As] a public company listed in the US, it may give them an advantage to take some share in the EU,” Lau said. “But it is unclear how much return on investments they can generate from this expansion.”
Robinhood CEO Vlad Tenev told investors during last month’s earnings call that the crypto market benefits from cryptocurrencies. “a relatively clear regulatory framework” In the EU.
Launching in Europe “will expand the addressable market of customers that we serve by hundreds of millions,” Tenev said at that time.
The launch comes after Robinhood’s transaction-based revenues on cryptocurrencies declined to $23 million during the third quarter — a 55% quarter-over-quarter drop.
Not only Coinbase experienced a similar slowdown. Coinbase’s transaction revenues fell by 12% in Q3 compared to the previous three-month period. Analysts attributed these declines to the weakness of cryptocurrency markets, as well as low volatility.
Robinhood’s recent digital asset momentum has increased amid the recent cryptocurrency rally. The company’s notional November trading volumes for crypto assets were 75% more than their October figures, according to an official Monday filing.
Morningstar’s Michael Miller pointed out that Robinhood’s EU crypto launch is part a larger expansion. Last week, the company launched brokerage services in the United Kingdom.
“I would see the two moves as being tied together,” Miller indeed. “That said, it’s hard to tell how successful this will be for the company since it is entering a crowded market as a relative newcomer.”
Miller stated that Robinhood’s first-nine months net revenues were 7% crypto trading.
“So being able to expand its cryptocurrency business to the EU would be helpful,” Analyst said: “But I don’t know if the impact would be that dramatic unless it significantly outperformed its US operations.”
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