By Mark Maurer

Robinhood Markets is banking on a major expansion of its cryptocurrency trading business under a more supportive Trump administration as it continues to diversify beyond traditional brokerage services.

The Menlo Park, Calif.-based company made its name during the craze over meme stocks such as GameStop, but in recent years has moved into retirement accounts, offered contracts that allowed investors to bet on the outcome of the U.S. presidential election and released a credit card. Last year it agreed to acquire crypto exchange Bitstamp in a $200 million deal designed to expand the crypto offerings it introduced in 2018 and attract institutional clients.

Robinhood played it safe with crypto services in the U.S., however, while it and other companies with crypto operations remained in the crosshairs of the Securities and Exchange Commission under former Chair Gary Gensler. The SEC levied a series of regulatory penalties on the firm since 2020 and had threatened to sue its crypto unit over potential securities-law violations.

Now that President Trump has chosen crypto ally Paul Atkins to succeed Gensler, Robinhood wants to pick up the pace.

"Currently, there is a more innovation-friendly stance on crypto, and that's going to help that part of our business undoubtedly," Chief Financial Officer Jason Warnick said.

"We'd like that business to be global and as big as possible and as fast as we can do it responsibly," he added.

Already reaping benefits

Robinhood has already benefited from the rally in bitcoin and other digital assets that followed Trump's election, reporting that crypto trading generated $358 million in revenue during the fourth quarter, more than half its total transaction-based revenue. The company's customers traded $71 billion worth of notional crypto in the fourth quarter, up from $14 billion the previous quarter.

Greater clarity on crypto regulation in Europe has led Robinhood to move faster there, according to Warnick. The company allows European investors to earn interest on their crypto holdings and permits trading on a wider array of digital assets than in the U.S.

"We should be able to innovate faster here in the U.S., and for the last few years, we've been able to innovate faster outside of the U.S.," Warnick said. "We're encouraged to catch up here."

One example of that innovation is tokenization, or putting real-world assets like U.S. equities on the blockchain, which "could be the future of how equities are traded," Warnick said. Robinhood wants the SEC to provide clarity on which tokens are securities or commodities and allow U.S. platforms to tokenize real-world assets, he said.

Robinhood is also eyeing a bigger push into stablecoins, which it uses to settle trades outside banking hours. The company recently partnered with other crypto firms to form the Global Dollar Network, which uses its own stablecoin called Global Dollar, or USDG. "Over time, there's an opportunity for folks to earn yield on stablecoins, which is not the standard today," Warnick said.

Under Trump, the company will likely aggressively launch a suite of crypto products, possibly pulling market share away from and competing more squarely with Coinbase, said John Todaro, a senior research analyst at Needham. "The ongoing pressure they had from the SEC pretty much goes away," Todaro said.

Managing costs

Despite new opportunities in crypto, the core business will remain a focus, Warnick said. Robinhood offers brokerage, individual retirement and joint investing accounts but lacks many others, such as custodial, trust or mutual fund accounts. "It starts to get depressing when I run through this list of things we don't have yet, but there's so much more to go do that's going to help bring more customers and assets into the platform," Warnick said.

The company has said it aims to continue containing cost growth for its existing businesses to low single-digit percentages.

"There's a very high bar in terms of leanness with which these new products are launched and the expectation for those products to ramp," said Alex Markgraff, a senior research analyst at KeyBanc Capital Markets.

A tight leash on costs helps shield Robinhood from frequent swings in the crypto market , among other things, Warnick said. "You don't see a quarter where crypto takes off and we say, 'Oh great, now we get to add all sorts of head count or cost to our business,' " he said.

Write to Mark Maurer at mark.maurer@wsj.com

(END) Dow Jones Newswires

February 24, 2025 06:00 ET (11:00 GMT)

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