Online brokerage firm Robinhood has opened its eagerly awaited crypto wallet to 1,000 customers, bringing cryptocurrency investing another step closer to the mainstream.
Announced in September, the equities trading platform — an early entrant in offering bitcoin, ether, and several other altcoins to the general public — on Friday (Jan. 21) opened a beta test of its wallet to the first 1,000 customers. Assuming all goes well, the test will expand to 10,000 in March, and then roll out to the rest of the 1.6 million customers on it WenWallets waiting list, Robinhood said in a blog post.
From one perspective, this is a baby step in terms of mainstreaming crypto.
Notably, you’ve got to have an existing digital wallet set up to participate in tests that include sending digital assets back and forth. Second, Robinhood has offered its 22.4 million customers the ability to buy and sell a handful of cryptocurrencies within its app since January 2018 — at the same time as payments processor CashApp — which is bitcoin-centric — and far before the better-known PayPal, which jumped into crypto in late 2020.
From another perspective, however, the beta test is a very big step indeed for crypto. The wallet’s purpose is to “fully connect Robinhood crypto holders to the greater blockchain ecosystem for the very first time.”
First of all, it suggests that Robinhood plans to expand the scale of its crypto trading business. At this time, Robinhood doesn’t really compete directly with cryptocurrency exchanges like Coinbase — it only supports seven cryptocurrencies compared to Coinbase’s nearly 150.
However, those seven — Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC) and Litecoin (LTC) — are the ones mainstream buyers would likely use to dip their toe into crypto.
Robinhood is pretty clear that it wants to expand this list, saying it plans “to support the ability to buy and sell other cryptocurrencies through Robinhood Crypto.”
None of which makes it an immediate threat to cryptocurrency exchanges. Coinbase alone claims 73 million verified users worldwide — more than triple Robinhood’s entire customer base, to say nothing of the 1.6 million on the wallet waiting list.
Besides, one of the Robinhood wallet’s key features will be to connect a Robinhood account with the wallet serious crypto investors use to store a wider range of altcoin investments.
Read more: PayPal’s Scale Drives Crypto’s Utility
And Robinhood doesn’t even pretend to compete with the other newbie-friendly places to buy crypto: PayPal and CashApp, which are payments companies that largely offer users the ability to buy bitcoin en route to spending it as a digital currency rather than investing in it like a stock. Besides, paying with even the biggest and best-known cryptocurrency, bitcoin, at the point of sale is still largely theoretical.
Robinhood does compete, however, with other discount equities trading firms like Charles Schwab, Fidelity Investments, ETrade and TD Ameritrade. By expanding the scope of its crypto trading capabilities, Robinhood could increase pressure on them to make the jump into digital assets.
Which would be great for the already multi-trillion-dollar crypto trading industry, opening it up to even more new investors. That said, it’s unlikely to happen while Securities and Exchange Commission Chairman Gary Gensler is still calling crypto the “Wild West” of investing.
Learn more: Gensler: SEC Is Coming for Crypto Exchanges
Which leaves Robinhood right where it wants to be: Standing alone straddling the traditional equity markets and the upstart cryptocurrency markets, with one foot on each.
Which means that when you want to be able to see all the stock investments you have at Charles Schwab and the crypto investments you have at Coinbase in one place, on one screen — Robinhood will be the place to do it.