“Majority of Customers Paying Exorbitant Fees”: Robinhood CEO on Crypto Charges

Avi Rosten

The co-CEO of Robinhood, the on-line broker and crypto trading app which has enjoyed a stellar rise in recent months, has explained their overall strategy for cryptocurrencies - remarking that most customers pay “exorbitant” fees with existing wallets and exchanges.

In a wide-ranging interview with Fortune, founder and co-CEO Vlad Tenev outlined the company’s long-term strategy for both their cryptocurrency and broader trading ambitions - noting that cryptocurrency customers - as with options trading - are paying too much:

“it’s the same story, with the majority of wallets and exchanges…customers are paying exorbitant fees right now, anywhere from 1.5% to 5% - a very sizeable fee. Our approach is use technology and automation to put the vast majority of the value of that transaction back into customers’ pockets, and we find the regulatory structure around that.”

Vlad Tenev

Launching cryptocurrency trading in February, the company - valued at $5.6bn - has seen their user base soar in recent months as a result. It is this element, Tenev explains, that allows the company to make next-to-no profit on their crpyto-trading services:

“We don’t intend to make very much money at all for the foreseeable future. we intent to operate it as a break-even business. The thinking behind that is that what we’re really doing is building an ecosystem ..right now the products are investing products - so crypto slots in very nicely alongside the 10,000 plus other instruments that people can trade..we think of monetizing a customer across a wide variety of different products in our ecosystem…including Robinhood Gold [their premium subcsription service]”

Vlad Tenev

With the company at some points reportedly adding 200,000 customers per day after launching their crypto offerings, the strategy seems to have paid off - the CEO adding that these customers have “started investing in lots of other things.”

Rapid but Cautious Growth

With the SEC recently confirming that they do in fact view ICOs as securities, and new ICO scams hitting headlines every week - Robinhood are keen to embrace new coins, albeit with caution - as Tenev explained with respect to their strategy for adding new cryptocurrencies:

“We look at a combination of factors, one of them is obviously what have the regulators said about it.. we also look at what the team behind the coin is doing, are they legitimate, what are their backgrounds..and then customer demand and things like the stability and resilience of the coin against protocol level attacks like 51% attacks for instance - which we know happened to bitcoin gold a couple of weeks ago..which was very eye opening.”

Vlad Tenev

 

Featured Image Credit: "Vladimir Tenev" by "JD Lasica" via Flickr; licensed under: "CC BY 2.0"