Robinhood to allow users to hold their own cryptos and NFTs

Robinhood hands over the keys to some of its customers’ cryptos.

The trading and investment firm announced on Tuesday that it will allow users to hold and custodian their own cryptocurrencies and NFTs in a separate, standalone app. It’s the latest move in digital assets for Robinhood as it seeks growth beyond stock trading. The company’s shares have fallen more than 70% since its IPO.

The new app will put Robinhood in competition with Coinbase and startups like MetaMask. Coinbase CEO Brian Armstrong called his company’s product the most downloaded mobile self-custory wallet in the US in a tweet on Monday.

The app allows users to store non-fungible tokens and connect to NFT marketplaces and “decentralized” exchanges. It will also allow users to earn income through other platforms and access a “variety” of crypto assets on other exchanges, Robinhood said.

Who owns or “custodians” someone’s cryptocurrency has become a contentious issue in the industry, fueling the viral “not your keys, not your coins” phrase. Some worry that storing assets on an exchange makes them more vulnerable to hacks or censorship.

Robinhood, which topped last year’s CNBC Disruptor 50 list, made a name for itself by offering commission-free stock trading. Its value and user base soared during the pandemic as it ushered in a new generation of traders. The company also became the center of the meme-stock saga after restricting trading of GameStop, the heavily shortened name that Reddit traders bought in defiance against Wall Street short sellers.

The trading business has slowed significantly in the past year. For the three months ended March 31, Robinhood’s revenue was down 43% year over year. Since its public debut in August, shares are down more than 70% and are more than 88% off all-time highs.

To spur revenue and user growth, Robinhood added more cryptocurrency products and features, and added extended stock trading hours in late March. In April, an earlier version of wallets was rolled out to customers that will continue to be available in the core Robinhood app.

“We believe crypto is more than just an asset class,” said Vlad Tenev, co-founder and CEO of Robinhood, in a press release. “By offering the same low cost and great design that people have come to expect from Robinhood, our web3 wallet will make it easier for everyone to hold their own keys and take advantage of all the opportunities the open financial system has to offer.”

Robinhood said the new wallet will be launched with a waiting list first and will be available internationally.

Notably, the new app does not charge any network fees, although Ethereum and Bitcoin fees are as high as $70 in some cases. A Robinhood spokesman said the crypto product will rely on third-party liquidity providers who “compete” for customer transactions behind the scenes to offset those network fees.

Robinhood derives most of its revenue from transaction fees in its core trading business through a brokerage industry practice called payment for order flow.

— CNBC’s Jesse Pound contributed to the coverage.