Robinhood unveils fee-free crypto wallet to 2 million users

Online trading app is also working on integrating the Bitcoin Lightning Network for faster transactions

Robinhood, which has about 18 million active users, started testing the cryptocurrency wallet in September last year. Reuters

Zero-commission trading app Robinhood Markets has activated its long-awaited Crypto Wallet feature, giving more than 2 million users a fee-free option to store and transfer digital currencies.

Eligible customers who signed up for the wait-list will be able to send and receive all cryptocurrencies currently available on Robinhood, Vlad Tenev, the company's co-founder and chief executive, said in a blog post on Thursday.

“With Wallets, customers will have full access to their crypto and can use it to participate in the crypto ecosystem — by tipping on social media, paying for NFTs [non-fungible tokens] and more. Unlike some other crypto platforms, there is no fee to withdraw crypto from Robinhood,” he said.

Robinhood, which has about 18 million active users, started testing the cryptocurrency wallet in September last year, causing its shares to surge more than 2 per cent to $41.54 on the news. In after-hours trading on Friday, Robinhood shares were flat, rising only 0.25 per cent to $12.10 at 10.55am UAE time.

The company listed on the Nasdaq technology index in July last year.

Cryptocurrency wallets are tools that are commonly used to store and transfer digital coins, and are protected by a private key. They come in different forms; hot wallets, which are connected to the internet and considered more risky, and cold wallets, which operate primarily offline.

Robinhood customers can already buy and sell a range of cryptocurrencies, including Bitcoin, Ether and Dogecoin, through the trading app.

“Our goal is to make Robinhood the most trusted and easiest to use crypto platform,” Mr Tenov said.

Due to regulations, the Crypto Wallet has yet to be made available to users in Hawaii, Nevada or New York.

Meanwhile, the trading platform is planning to integrate the open-source, layer-2 Bitcoin Lightning Network in the “near future” to enable faster transactions, Mr Tenov said.

“We are excited to bring even lower costs to our customers by integrating with the Lightning Network,” he said.

“Because these transactions occur ‘off-chain’, Lightning Network transactions occur in a matter of seconds versus minutes, and for pennies versus dollars, saving customers time and money. Network fees will vary based on demand in the Bitcoin network.”

At the height of the Covid-19 pandemic, retail investors flocked to trading platforms such as Robinhood and eToro to buy and sell stocks.

With time on their hands during movement restrictions and extra money to invest after a series of government stimulus packages, retail traders around the world embraced the “gamification” of trading that was driven by US meme stocks such as AMC Entertainment and GameStop, which surged in 2021 after the US video game retailer was shorted by Wall Street hedge funds.