But the degree of the sharp rise in crypto’s
importance to Robinhood’s business was
striking. Cryptocurrencies made up 41% of all
of Robinhood’s $565.3 million in revenue in the
quarter that ended June 30. That’s up from 17%
in the first three months of the year and from just
3% at the start of last year. The spring marked the
first quarter for Robinhood where new customers
were more likely to make their first trade in
cryptocurrencies rather than in stocks.
Robinhood CEO Vlad Tenev said in a recent
interview that he wants the company to make it
easy to trade any asset its customers are interested
in, and that increasingly means crypto.
“They’re interested in exploring this new asset
class,” he said. “So, no doubt, crypto has been very
culturally relevant through the first six months of
the year.”
Tenev also said he sees cryptocurrency companies
as Robinhood’s competitors, just like other
stock-trading brokerages. Coinbase, a publicly
traded crypto exchange, said it had $1.9 billion in
transaction revenue during the second quarter,
versus Robinhood’s $233 million in crypto-related
trading revenue.
With cryptocurrencies, Robinhood makes money
by routing its customers’ trade orders to market
makers. It’s similar to how Robinhood makes
money from its customers trading stocks: It gets
payments from Citadel Securities and other big
trading firms after sending them the stock orders
made by its customers.
Interest in cryptocurrencies surged in the early
part of last quarter, leading to a frenzy of trading
activity. Bitcoin hit $64,829 in April after starting
the year at less than $30,000.