Robinhood’s new wallet opens the door ever wider to crypto, NFTs and DeFi
Robinhood will launch a new, non-custodial wallet by the end of the year. It’s a bet that expanded crypto and NFT trading will help the company’s flagging stock.
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Months after Robinhood revealed its personal crypto wallet, the company announced a launch of a new, more versatile wallet.
This new wallet will be a standalone app designed to make it easier to buy, hold or move digital assets including crypto and NFTs.
In the past, Robinhood offered a crypto wallet that allowed its users only to buy and sell crypto via Robinhood’s mobile app. These assets weren’t available for withdrawal to personal, non-custodial wallets. To withdraw crypto from Robinhood accounts, you had to convert it to cash.
The new crypto wallet app marks a major shift in Robinhood’s crypto policy, which it says will benefit users. It also seems to be a bet that expanded crypto trading will help Robinhood’s stock, which has fallen 72% since its IPO last summer.
What the new wallet does
The primary goal of the new Robinhood crypto wallet is to allow its users to store and trade a wide variety of cryptocurrencies. This includes cryptos that aren’t currently available on the Robinhood app.
Robinhood says there won’t be any network fees for trading cryptos, which is a rarity in the non-custodial wallet space. On top of that, you’ll be able to buy and store NFTs and use decentralized finance (DeFi) protocols to earn yield on your crypto assets.
The thing you should keep in mind, though, is that with non-custodial wallets you are fully responsible for safeguarding your private keys. If you lose them, you won’t be able to access the assets in your wallet.
An example of a non-custodial wallet is MetaMask, which works on the Ethereum network and its layer 2 protocols like Polygon (MATIC). Learn more about it in our MetaMask guide.
Non-custodial wallet gives you full control of your assets
With a custodial wallet, like the one from the Coinbase exchange, you’re giving up your private keys to the exchange. This has raised a worst-case scenario currently being debated: In the event the exchange goes into bankruptcy, you might lose those crypto assets.
On top of more control and security, non-custodial wallets give you access to the web3 economy where you can use your assets on decentralized applications (dApps). This is often not the case with custodial wallets from crypto exchanges.
Why is Robinhood adding a new crypto wallet?
Robinhood likely views crypto as a key to future growth, and the wallet will let it compete directly with crypto brokerages. CoinDesk reports that Bitcoin is the number one recurring asset that Robinhood users have bought in 2022, so its users appear interested.
Robinhood has been struggling. Its latest earnings report showed declining revenue and usage, partly due to the stock market’s big pullback.
Robinhood also got caught up with the GameStop drama about a year ago, when the company temporarily halted trading on some popular meme stocks. Some users complained they lost money as a result.
Another intriguing reason for Robinhood expanding deeper into crypto could involve rumors of a takeover. Sam Bankman-Fried, the founder and CEO of FTX, a highly-rated cryptocurrency exchange, recently bought a 7.5% stake in Robinhood. That added further fuel to the rumors.
You can sign up for the waitlist
Robinhood announced it will launch the new wallet in beta “later this summer”. Anyone who is interested can sign up for the waitlist now. The full launch is expected at the end of the year.
Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.
Kliment Dukovski owns cryptocurrencies as of the publishing date.