Robinhood, the commission-free stock trading app, has now decided to acquire Bitstamp, a Luxembourg-based crypto exchange for $200 million. The deal marks Robinhood’s largest acquisition to date and heralds the company’s first foray into the institutional crypto market.
The acquisition is expected to close in the first half of 2025, pending regulatory approval.
Traditionally, Robinhood has focused on attracting retail investors with its user-friendly interface and commission-free trades. However, the Bitstamp acquisition allows Robinhood to tap into a new and potentially lucrative market segment. Bitstamp, with its licenses and registrations in over 50 countries across Europe, Asia, and the US, provides Robinhood with a springboard for significant international expansion. This global reach is set to complement Robinhood’s recent launch of its core stock-trading product in the UK and its foray into crypto trading within the European Union (part of its efforts towards expanding its product offerings and geographic reach).
To add to this, the 13-year-old Bitstamp offers staking, a process where users can earn rewards by locking up their crypto holdings to support blockchain operations. This is an increasingly popular feature among crypto investors, and incorporating it into Robinhood’s crypto platform is expected to yield fruitful results.
“The acquisition of Bitstamp is a major step in growing our crypto business. Bitstamp’s highly trusted and long standing global exchange has shown resilience through market cycles. By seamlessly coupling customer experience with safety across geographies, the Bitstamp team has established one of the strongest reputations across retail and institutional crypto investors,” said Johann Kerbrat, General Manager of Robinhood Crypto. “Through this strategic combination, we are better positioned to expand our footprint outside of the US and welcome institutional customers to Robinhood.”
The acquisition comes at a time when Robinhood is facing regulatory scrutiny in its home market. The US Securities and Exchange Commission (SEC) recently issued a Wells notice to Robinhood, indicating potential enforcement action over its cryptocurrency business. Nonetheless, the firm has seen a significant uptick in its financial performance over the past year. In its Q1 2024 report, the company reported a 16% increase in monthly active users, reaching 13.7 million, and a 40% rise in revenue, totaling $618 million. Notably, transaction-based revenue surged by 59%, primarily driven by a 232% increase in cryptocurrency income, which reached $126 million. The company’s crypto trading revenue has also skyrocketed in recent quarters, with its Q1 2024 report demonstrating a 232% increase in cryptocurrency income compared to the previous year.
