Robinhood a force for crypto good?

The online trading firm is creating options, and new investors benefit most


“When we saw the [crypto] market begin to correct, which we all expected, institutions didn't lose interest. It was exactly the opposite. They look at it as an opportunity to enter when things are not too frothy” — Adam White, VP & GM Coinbase

The Big Block

Media outlets, including The Block, have called into question the marketing claims of Robinhood Crypto as a “free” product over the past few weeks. Arguments that there is a real cost to trading and speculating via Robinhood Crypto have been introduced by The BlockSeeking AlphaZeroHedge, and others. Given Robinhood’s aggressive marketing of their product as free, it opens the company up to criticism of both the monetary and non-monetary costs that customers of their cryptocurrency products bear. That being said, the concerns and true costs around Robinhood’s “payment for order flow” may be overstated. Seeking Alpha ran a piece titled: “Robinhood Is Not The Villian It’s Made Out To Be.” And Arjun Balaji pointed out that order-flow payment is “reasonable” and actually industry standard in the equity asset class. Ari Paul highlighted this is a situation of “tradeoffs” that need to be balanced.

Relative to other options such as Coinbase or Gemini, there are clearly significant tradeoffs that customers make when choosing to trade cryptocurrency via Robinhood Crypto, however. As we highlighted in The Block: “[Robinhood Crypto] violates many of the core principles of cryptocurrency ownership: basic financial sovereignty through holding private and public keys, the ability to move funds at will, transparent pricing, and the absence of legalese unrelated to the cryptocurrency itself.” That being said, consumers have many options on how to purchase cryptocurrencies — and this is a free market in which many value Robinhood’s positives versus the tradeoffs.

Read More on The Block (3 Minutes)


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