Dec 13, 2023

Popular U.S.-based brokerage platform Robinhood (HOOD) announced last week that it started letting customers in the European Union (EU) trade crypto, hailing the region's comprehensive digital asset rules.

Video transcript

Robin Hood crypto recently launched in the EU with Bitcoin Rewards program that will allow customers to earn a percentage of their trading back in of their trading volume back in Bitcoin. Joining us now to discuss is Robin Hood Crypto General manager, Johan Kratt. Welcome Johan. Good morning. How are you? Good to see you. So uh explain how this, explain how this works. See if first of all you've launched in, in the EU uh how's it been going? And with this rewards program, uh what are the regulatory issues if any with uh providing a little bit of uh uh rewards to uh people who sign up their friends, let's say? Yeah. So, you know, just to give you a quick idea, we just launched last Thursday in the EU. Um and it's now available to every EU citizen. Um as long as they have an I Os or Android device, um it's going to be the lowest uh the lowest cost to trade crypto in the EU. And so that's something that we are really, really proud of. Um And yeah, like you explained. So if a customer signs up and place it frustrate or if they refer a friend, they will be able to get up to one Bitcoin and on every single of that trade, they will get Bitcoin back. Um And to answer your question, you know, we see it as a loyalty program, so we don't see that as an issue in terms of regulations. So how does somebody get up to one Bitcoin? And you know, one Bitcoin is trading at what, like $45 us, almost about €45. Uh How does one earn that? So when you sign up and pay to frustrate or when you refer a friend, uh you know, it, it will be uh random and so most people will obviously not get uh that that amount and I think 98% of the customer will get between 10 and €20. Uh But for the, for the rest, you know, some people will be lucky and hopefully get a Bitcoin. Um And I'm hoping that we can, uh you know, announce it when, when this happens. So it's like a, it's a uh a lottery. Uh Yeah, I think something like a, a reward program for sure. Now, from a compliance perspective, what did you have to do to prepare to launch in the eu we of course, know that MC A regulation has passed, it's going to take some time to get implemented. Uh What were the differences, I guess between launching the crypto product in the United States versus the eu, yeah, you know, I think that's really one of the important point and, and one of the reason why we, we decided to expand in the eu uh the arrival of Mica and the fact that it brings a very clear framework that every company uh crypto companies like us will be able to implement what is a really big advantage. Um at this point, you know, we are still in the process of, of transitioning uh Mica will only be enforced uh end of next year. And so for us, it was really important to be part of this market uh by, by the time Mica will be in place. So is this another situation uh in this situation as well? Um I I the, the users of Robin Hood, they don't actually own the crypto, is that correct? Are they, they're just taking on the risk or are they going to get wallets where they, they will actually have the crypto to spend? Yeah. So in any case, the are the owner of the, the, the crypto, we are just acting as an agent and the crypto that, you know, customer are acquiring are held in, in storage um on our study, 95% plus of all the crypto is stored in storage um in the US, we have transfer available. So you can deposit and transfer out for crypto if you are in an eligible state. Um in the eu it will happen, you know, in a few months. But for this launch, they will just be able to buy and sell John on the topic of the US versus the eu. There are some tokens available to folks in the eu that have been delisted in the United States. How did you make the decision on what to list and what not to list in the eu? And might those tokens come back to the platform in the States? Yeah. So for the States, we usually don't, you know, announce in advance if we are going to list or delay any assets. Um The goal is to obviously uh you know, prevent any kind of front running or, or insider trading uh for, for the eu, you know, it's a different market. We, we talked to our customers um over there before we launch, we had a lot of discussion around what they were looking for. And again, like, because there is this clarity coming from uh the regulators, we are able to do things a bit differently. Um We announced also, you know, when we, when we launch in the EU that we are going to add a lot more features that are more crypto native uh like sticking and um in the future. And so, you know, this is to show that it's going to be two different markets, two different businesses, we have different team working on it and, and obviously there will be different product at the end of the day. Now, we've had lots and lots of market action. Recently, we took a look at the markets at the top of the show. They're slightly down this morning, but they're not looking too bad. I know Robin Hood recently reported a 75% month on month increase in digital asset trading volume in November. Talk to us about what you think is driving this new interest uh for retail investors. Yeah, you know, there's a lot of uh rumor of the, the ETF obviously there is also the Bitcoin halving happening in April. Um So a lot of people are thinking about, you know, what is going to be the impact uh on the price, what is going to be the impact on the miners? Um And I think also, you know, there is AAA bit of a relief from uh our customers. Uh There was a lot of question after FTX after Binance being sued. Um And now that this is kind of behind us, I think customers are ready to embrace crypto again and, and start using it again. WW was this uh your observation did the what which happened first? Was it the rush of retail in that caused a rally or do you think that the ra was it the rally that caused the rush of retail? Yeah, that's your, your guess is as good as mine on this one. You know, your observation, did you see, did you see the uptick happen first? And then more volume or did you see more volume as it was going up? Yeah, I, I think the two are kind of correlated. It, it will be hard for me to, you know, tell you if one happened before the other. And I think, you know, it's one of the things that I really like about Robin Hood and working at Robin Hood is we are not necessarily focused on, you know, the short term rally, all these kind of things we are building for the long term. Um That's why, you know, for the EU launch, for example, we are starting to work on it even though Mica is only like uh 16 months or 18 months away. And so I think, you know, for us, we've always really been focusing on, let's let's build a future that do will want when the, the, the cycle comes back and when the rally comes back and not just focus on the very short term and try to, uh, you know, squeeze everything with them. The reason I ask is because of, uh, of course, we, we get a lot of people saying, hey, the, there's something about this rally, it might not have been retail driven. And uh II I guess I'm wondering if you have any insight into that given that you are such a uh a prominent retail product? Yeah, I, like I said, I, I don't, I, I think it would be hard to say that it's retail did not contribute to this rally. You know, we see a lot of activity on chain which I don't think institution are necessarily spending a lot of time on lay twos and um and on defied that something like that. And the fact that we are seeing this um in the past few weeks, I think also shows that retail has been really involved in this rally. John, you brought up uh customer questions after the fall of FTX and Binance uh being sued by the SEC. What kind of questions were your customers asking? And the most recent um doj charges against finance that we of course know they settled with finance for over $4 billion. Did that have any impact on business? Yeah, absolutely. Um I think, you know, we saw uh a lot of our customer coming uh into our platform after either FTX or Binance, um they deposited their assets from this platform into our wallets and so they were able to open an account and, you know, uh use our platform and in terms of question, we, we got a lot of this uh you know, what we thought was obvious and basic for any Cryptocurrency company. Um uh you know, for example, we don't commingle funds um unless it's it's for operation like network fees or things like that. Um Any movement for from a wallet requires multiple people. Um Any white life listing of addresses require leadership to be involved, you know, like very, very basic things that we, we think is necessary to operate safely a business. Um All this stuff we, we realized by reading the, the lawsuit, of course, of FTX and, and uh Binance that it was not necessarily obvious. Um And so we got a lot of this question from our customer and we spend a lot of time trying to explain a bit more like how do we work internally? Um And you know, really trying to show that we are a safety first company. We, we are not listing 100 of tokens like for the platform. We are not uh cutting corner, we're not trying to launch the latest feature as soon as possible. We are trying to really uh be, be mindful of, you know, safety and trust and making sure that we'll be able to slowly build a, a very good business. All right, Johan, we are going to have to leave it there. Thanks so much for joining the show this morning. Thanks for having me again. See you soon. That was Robin Hood crypto general manager, Johan Kratt.

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