Unchained - Why Robinhood, a TradFi Hub, Is Growing Its Crypto Business Globally - Ep. 658

Episode Date: June 11, 2024

Robinhood has been in the spotlight for its $200 million acquisition of European crypto exchange Bitstamp. The TradFi app’s venture into crypto is paying off: its recent earnings showed that revenue is growing substantially, and the Bitstamp acquisition is just one way the company will grow the pie. Johann Kerbrat, general manager of Robinhood Crypto, came on the show to discuss the acquisition, Robinhood's plans for expanding its crypto business internationally and into the institutional market, the company's approach to listing crypto assets, how regulation has affected its business decisions, and its efforts to bridge traditional finance and decentralized finance. Show highlights: 02:14 How the acquisition of Bitstamp will reshape Robinhood 08:51 Whether Robinhood could list more coins and whether it’s considering more acquisitions 11:54 Whether the U.S.’s unclear crypto regulation influenced the decision to acquire Bitstamp and which other jurisdictions, besides the EU, Robinhood Crypto is eyeing 17:46 Why Johann was disappointed by the Wells notice Robinhood received from the SEC 20:47 Johann’s U.S. crypto regulation wish list and why Robinhood supports the FIT21 bill 24:09 Why Robinhood delisted ADA, MATIC, and SOL, and the process for listing or delisting a coin on the platform 29:49 Johann’s background in crypto and trajectory at Robinhood Crypto 31:35 How Robinhood is uniquely poised to help bring real-world assets and securities on-chain, and how it will handle offerings for institutional investors 37:48 The impact and importance of the introduction of spot bitcoin ETFs 44:26 Why Robinhood decided to offer staking, but only for Solana, not Ethereum 46:11 Whether there’s demand for crypto-native features in the Robinhood platform 48:26 Robinhood’s collaboration with Arbitrum and whether the company might build their own Layer 2 54:29 Johann’s take on the memecoin mania and whether Robinhood could list them 59:26 What Johann thinks about the political fight around crypto in the U.S. Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Polkadot Guest: Johann Kerbrat, general manager of Robinhood Crypto Links Acquisition of Bitstamp:  Unchained: Q&A With Robinhood Crypto General Manager: Why the Crypto Giant Went to the EU Fortune: Robinhood defies the SEC by forking over $200 million for a crypto exchange DL News: Robinhood crypto head says Bitstamp will help lure wealthy investors Robinhood’s crypto business: Bloomberg: Robinhood (HOOD) Profit Beats Estimates as Crypto Revenue Surges Robinhood Reports First Quarter 2024 Results Regulatory actions: Reuters: Robinhood Crypto gets Wells notice from US SEC  Robinhood Crypto Launches Staking in Europe with Localized Apps to Follow Memecoin mania Unchained:  Celebrity Tokens Continue to Bleed With Some Memecoin Traders Losing Six-Figures  Why Memecoins Have Been 2024's Most Profitable Crypto Trade: Ansem and Kelxyz Ether ETFs: Unchained:  Ethereum ETFs Likely Protect Ether From the SEC. But What About Staked ETH?  Why the SEC May Not Be Done in Its Legal Battles Over Ethereum Kerbrat’s statement on ETFs Learn more about your ad choices. Visit megaphone.fm/adchoices

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You're a no-hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto nine years ago, and as the senior editor of Forbes was the first mainstream meter purer to cover cryptocurrency full-time. This is the June 11th, 2024 episode of Unchained. Pocodot is the original and leading

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guest is Joanne Kerbrot, general manager of Robin Hood Crypto. Welcome, Joanne. Hi, Laura. How are you? Good. Nice to have you. Thanks for having me. Robin Hood seems to be making a number of moves related to its crypto business as of late. And it also appears that crypto has been pretty good for Robin Hood. The company's Key One earnings report said that revenue from crypto trading had more than tripled to 126 million from 38 million a year prior. And crypto assets under custody doubled to $126 billion in the same time period. And monthly notional trading volume tripled as well. And then last week, now Robin Hood announced that it will acquire European crypto exchange BitStamp.

So although I understand the current BitStamp CEO, J.B. Grufthio, I guess, will stay in place. Since this is Robin Hood's first crypto exchange, what would you like to do with it? How do you expect this will help Robin Hood's business? and how do you also think that you can make crypto exchanges better generally for users? Yeah, I mean, there are a lot of ways we can make crypto exchangeers better, I think. But to answer your first question, you know, for Robin Hood, this acquisition is going to change things in three different ways. The first one of the most important is that it's going to accelerate our crypto international expansion. The second one is, like you mentioned, we are going to bring up.

a globally scaled crypto exchange to Robinode. And the third one is really going to be the first institutional business for Rabinode. And the three key points that I just mentioned were kind of what we wanted to focus on for the next few years on the crypto side. BitStamp already holds over 50 active licenses and registration. And so they will bring in customers across the EU, the UK and Asia to Rabinone. And on the institutional side, I think it's a pretty important one. You know, Robin Hood has always been focused on the retail side.

And BitStamp actually has been trusted by institution for its reliable trade execution and things like API connectivity and offering like crypto as a service and institutional lending and staking. So it really means that Robin Hood will enter the space of an institution with an active and highly trusted business already that has active relationship as well in the market. And to answer your second question, I think the market needs more trusted exchanges. You know, when you look at the past five years with what happened with a lot of our competitor,

we can say that a lot of good actors were active. So we think that with speed time, regulatory operating licenses already, the trust that they have is a regulator, Plus the fact that we're going to have the resources that Robin Hood has, we think we can really create a good combination and a good place to trade in the future. And what is the current makeup of your users in a geographic, like geographically? For Robin Hood itself, you mean?

Yeah. And even, I don't know if there's a difference also with the Robin Hood crypto users. Yeah, exactly. So we are mostly a U.S. base shop, as you know, we worked in the U.S. was since inception of Rabinud. Recently, we launched Rabinitr crypto in the EU in December of 2023. And so we have customers from some of the countries in the EU. And we also launched the brokerage business in the UK in April of this year. So, you know, we are still very at the beginning of our international expansion. And that's where the Bitsam acquisition makes a lot of sense.

I do have to also mention that we have our South Coast Day wallet. that is available in 140 plus countries. And so we do have a bit of international experience. We just want to accelerate on it. And so I don't know kind of what happens on the back end currently in Robin Hood. You know, obviously you famously use a payment for order flow business model, at least for equities. I'm not sure if it's the same business model for crypto.

Is that the case? It's about the same. Like we call it rebate, but it's about the same thing. We send the order of customers to, to market makers and we receive revenue on the volume that we sent to them. And so when you have an exchange in-house, does that change the economics of the trading app at all, either for your business or for users or both? Yeah, you know, I think at this point, it's very early to say the bid stamp acquisition

is going to take a decent amount of time. We expect it to close in H1 of next year. And so we have a lot of time to think about all these problems. in a short term, like we don't expect any change for our customers. And we actually, on the Robinite side, made a lot of change in our structure. So, you know, for example, we clearly displayed on the order flow, the spread of your order. And so if you buy Bitcoin or if you buy anything else, we'll show you exactly your buy or sell spread. And we'll tell you how much revenue Robin is making.

And we think it's a big change because when we talk to a customer, which is a something that we really like to do. We notice that they have issues to compare the different platform. Some people are charging a fee. Some people are charging a fee and a market up on the spread. And so we really wanted to give clarity to our customer and be 100% transparent, which is what we did. Okay. So essentially, you don't have any specific plans for how that. I mean, famously, I guess, like, trades are free on Robin Hood. That's right. We think on Robin Hood. on the US side, we offer the lowest cost for your crypto in average. And so we've done a little analysis and we had experts check the math.

And if you use Robin Hood versus other platform, you will receive more crypto for the dollar amount you spend in average. And it's part of what I was explaining. Like we really wanted to focus on this aspect. I think, you know, if we want to expand the number of people using crypto, I think we need to be a lot more transparent that we've been in the past, in the industry, and we need to focus a bit more on offering more value to our customer. Okay. And then just to go back to my original question,

because so as you mentioned for the payment for order flow, you work with market makers. If you have this exchange, is it still just you're working with the market makers and so it wouldn't necessarily affect prices for consumers? Or do you see a way to even drop prices for consumers even more? Yeah, I think on this point, it's still very early. Like we don't expect any major change in the near term. I think, you know, if we see a way that we can offer a better value to our customer,

we'll definitely look into it and we'll try to implement it. But, you know, I think at this point, for us it's really important that we are able to offer that lowest cost that I mentioned. And I think for that, we need to have a combination of market makers that are in competition to offer the best price. Okay, and so BitStamp offers a lot more coins than Robin Hood does. And I wondered if you expected that the two businesses would just remain separate or different in that way, or I didn't know if you thought that there would be ways where the acquisition of BitStamp

could enable the app to offer more coins or vice versa. Might the fact that Robin Hood has acquired BitStamp caused BitStamp to streamline the number of coins it offers. Yeah, really at the same thing. that I was mentioning, like we don't expect any change in the near term. I think BitStamp has been executing very well with the regulator in the country that they are present. You know, I think to receive that many licenses,

the way that they have, you need to actually have a very close relationship with regulators and you need to really show a track of record of a compliant business. And therefore, we don't expect to change anything on their side in the near term. And on the listing coins for Robinode, I think, you know, I've mentioned it in the past. We have a pretty extensive listing framework

where we go over like different factor, like from security, technology, operation. We want to make sure that there's enough liquidity in the market. And so, you know, we at this point, we are not going to change anything because of the acquisition, But it's definitely something that we always look at to see if we can add more features or more offering in our platform in the US, for sure. And so obviously, I know you're just in the middle of making this acquisition.

But as you've discussed, you're looking at this acquisition as a way to kind of increase your geographic footprint. And I wondered if Robin Hood is also considering acquisitions of other crypto exchanges. And if so, what factors would you be looking at to gauge whether or or not an exchange would be a good fit? You know, we're always looking at acquisition or partnership or anything that can expand or plan. I think in the case of Bidstam, there was a many factor that we looked at. And, you know, we were really excited about the fact that they were not just an exchange for

retail, but like I said, at the beginning, like they were also very active with the institution, which I think is a brand new business for Robin. But I think, you know, if there is anything else that could make sense, we will obviously look at it. But also, to be honest, I think we will have our end school for the next few months with this acquisition. And so we're going to focus on it and make sure that it's successful. The same way that, you know, we've done like a few acquisitions in the past, like recently X1, and we recently launched the Robin and Gold card. And so, you know, we want to make sure that every acquisition that we do are as successful as this one.

Yeah, yeah, no, I can understand it's going to be an undertaking. Well, you know, a few times you've mentioned that part of the reason for the acquisition was due to the fact that they have, you know, more than 50 licenses and registrations globally. And, you know, obviously we're in this situation now in the U.S. where the SEC has taken a very confusing and also, you know, stringent approach to regulating crypto. And I wondered if it was very very. to say that because of the SEC's approach to regulating crypto, that Rubbenhood decided to try to expand its crypto business in the EU instead of in the U.S. You know, I think it's definitely one of the reason why we look at the EU market was that there was this clarity coming from the MECA framework in 2025. And, you know, thanks to this framework, you're basically going to have like one market that is almost comparable in the size of the U.S. population with one clear framework that we can use and we can understand.

So that was definitely one of the reason. I do think that the more clarity there is, the more we can play by the world and the more we can do things in a good way, I do think that if we could have the same kind of clarity in the U.S., we will also try to use it and make sure that we are working with the regular the right way around our offering. I think in the EU, you know, the detail is still,

are still not 100% clear on everything around Mika, like some of the finalized requirements are still being worked on, but I think it's a huge step forward for the industry. So I'm really excited about seeing that. And, you know, as myself a French citizen, I do think that it's a very exciting development for the EU. And hopefully we'll see the U.S. also embracing the journeys. And so I understand what you were saying about how the EU is, you know, a comparably sized market. And there's going to be, you know, one unified regulation there.

But obviously, we are also seeing that there are numerous Asian jurisdictions that are developing regulations for crypto. And I wondered amongst those, are there any particular? particular regulatory regimes that you, you know, find appealing? We've been, you know, looking at this quite a lot, I think, not just in Asia, to be honest, like we start to see a lot more countries embracing the, either like offering a license for virtual assets or offering a framework like Mika and the EU. But I think, you know, that's part of the acquisition also, a bit stamp owning a license in Singapore was definitely interesting for us and, you know, something that we're going to keep looking at.

I think the Asia market is also extremely interesting for revenue. And, you know, we'll try to expand when we can. I think the main focus for us has been to make sure that the EU expansion is successful. And once we feel like we've done a great job there, like we can continue to expand in other places in the world. and that's kind of the beauty of the system that we built, right? They can be easily scaled to other countries. And so we just need to make sure that we find the right way to engage with a customer in the market

and that we have the right feature that they are looking for because each market is different and each market has different expectations. And this is just kind of to understand the state of crypto regulation globally today. But, you know, as we've been discussing, BitStamp has, you know, these more than 50 licenses, registrations globally. How long do you think it would take Robin Hood to try to obtain those license and registrations from scratch right now if it were to just start on its own without having done this acquisition? Like, I'm just curious what it's like to try to work with the regulatory regime globally.

I mean, it's very hard to say, you know, it will depend on the country, it will depend on how you're applying to the licenses. I think overall, like, you know, we've been really welcome as a company. You know, when we talk to a regulator, they usually know Robin's name, and they usually know that we are a safety first company, that we are not, you know, doing crazy things in the crypto space and that we are caring about the customers before everything. So, you know, it would be hard to say,

but usually just to give you an idea is like if you want to apply to a license, you need to get an office, you need to hire people on the ground, you need to build an application that can take quite some time, and then you need to engage with the regulator and meet with them regularity. So it's definitely an acceleration for us to acquire office stamp in that thinking. And one other thing about that is I was wondering, like, if you were to start from scratch, do you have an estimate on how much that would cost? Just like that, no, like really what I said is kind of true, right? It will depend on really what you're trying to do, also what type of application.

Every license is kind of multiple different kind of categories and different type of ways to engage with a customer. So it will be difficult to give you a number like that. Okay. Yeah. I figured, but also, you know, just looking at it, you know, this price tag of $200 million and then thinking about the 50 licenses, I mean, it does feel like a very smart. acquisition in terms of time saved, money saved, access to these markets. You know, I just personally from viewing it from the outside, it does seem like it was a smart move and a commentary on kind of the state of crypto regulation globally. Absolutely.

Yeah. So speaking of crypto regulation, obviously the SEC issued a Wells notice to Robin Hood in May. And in an interview you did with a journalist at my publication, you said that you had met with that actually 16 times. And I was curious if you could just talk a little bit about, you know, as far as I understand, I think it's your chief compliance officer or a legal officer used to be an SEC commissioner. And I wondered what was the tenor of those conversations and how did it result in this Wells notice? Yeah, I mean, you know, we don't want to share too much on what happened with a regulator, but, you know, I think at the end of the day, the TLDI is that

you know, the chairman of the SEC did invite the companies, the cryptocurrency companies to come in and register. He said that, you know, it was just a procedure to do. And so when, when that announcement was made a couple of years ago, we did come in and register. And like I mentioned in the past, we met with them several times. And that's kind of why we were, you know, surprised and disappointed by the Wells notice, because if there is a company in the US who can work with regulator, I think it's Robin Hood. We are, you know, licensed with, we are regulated and licensed with the SEC and FINRA on the brokerage side. On the on the on the crypto side, we are working with the New York DFS, which is one of the

hardest regulator in the US for crypto. You know, we know how to work with regulator. We know how to engage with them. So we did try to do the right thing when when they ask us to come in and register. And so, yeah, we were disappointed, frankly. I think at this point, we're just going to see what happened and we're going to keep engaging with them. We still think that there is a need for clarity in the space. And we think that we will keep fighting on that side to make sure that we can offer the product that our customer wants

and at the same time also engage with the agency. Obviously, I recognize that things still need to play out, But do you have a sense of what exactly the issues are or which coins it is that they take issue with? No, we haven't received yet the details there. And, you know, I think for us, what we want to make sure is that at the end of the day, we feel very good about the crypto offering that we have on the platform. Everything that we've done in the past, you know, we didn't list hundreds of coins like some of our competitor. or we never offered staking or landing in the U.S. And, you know, we feel good about the offering.

So we were going to keep engaging with them and see what they have to say. So if you were to craft a wish list for crypto regulation in the U.S., what would be on your list? Yeah, I mean, you know, custody rules, I think it's something that is really important. We saw it in the past when we saw some of our compilator coming in-linked funds between firms and customer assets. You know, I think that's something that we've been focusing on our side. Like I said in the past, like we're a safety first company.

We've always tried to really be careful about what we've done. And, you know, sometimes people were telling us that we were too slow, but also at the end of the day, we're still standing straight and, you know, happy about the offering that we have on the platform. And then, yeah, more clearly on what is the security, what is not. I think we've been trying to work with the tool that the regulator gave us. We think that a lot of players are having the same issues. And so when you see an entire industry not really able to do the right thing,

you see issues like you've been seeing in the past. So I don't think regulatory by enforcement is a solution. I think we need to have a clear role and a clear level. and a clear bill that explained everything at this point. And I'm sure you have seen the Fit 21 bill that passed, at least in the House. That proposed that the main regulator, even for the spot markets, be the CFTC. And I wondered what your commentary was on that. Yeah, I mean, we're extremely supportive of the bill.

I think the more clarity in the space, the better. And I think we are going to see a more flourish. crypto industry in the U.S. if we have the clarity. And I think the fit 21 is a step in the right direction. Like I mentioned earlier, like as a French citizen, I moved to the U.S. because I felt like the U.S. where was a country where you innovate and where you move forward.

And now seeing that the EU is actually in advance compared to the U.S. is kind of a surprise to me, I will say. So I think if we want the U.S. to take back the crypto innovation, we need regulatory strategy, and I think F-21 was a good step. And earlier when you mentioned that Robin Hood has not engaged in staking or lending, do you have particular regulations you would like to see for either of those? I think so. I think in the same space, like I think staking is vital for some of its chain, right? Like, I am the first one. And I think it is very complicated for the comprehensive.

companies run now to offer it in the US. And so I think we should also see this type of client coming from the regulation. But do you have a particular way you think that that regulation should be crafted? Oh, you know, I can do many things, but writing a regulatory bill is not one of them. So I will let them work on that. And, you know, we're always happy to engage and comment on bill and offer all expert on the technical side opinion, and then hopefully we'll see something that can work for the industry. Okay. And last year, after the SEC sued Coinbase and finance, Robin Hood delisted Ada, Saul, and Maddoch,

and I wondered what the process was for making those kinds of decisions. Yeah, I mean, you know, I think, like I said, we have a pretty long listing framework for listing assets. Some of them are on the different analysis, operation analysis, and really the allegation from the SEC kind of created this uncertainty on these coins, on the way we can operate. And so we had to make the decision to deal with the assets. But it is one of this thing where, you know, the client can really help the industry because, you know, for us, we are not, like I said, an exchange in the past.

and we couldn't necessarily offer by himself this crypto asset without a combination of outside party market maker and equity provider. Oh, I see. Okay. So maybe that is the answer to this next question, but I'll just ask it directly. After Judge Annalisa Torres's decision on XRP last summer, Coinbase and Cracken did relist XRP. And I saw some speculators online saying that perhaps the BitStamp acquisition

might lead Robin Hood to list XRP. And I wondered if you had a commentary on that. Yeah, we usually don't comment. As you know, when we list an asset or when we, you know, start to offer it, we don't announce it in advance. We want to prevent any kind of insider trading or, you know, people that are more in the known than the other. So that's part of a listing process.

You know, when we work internally, there's only a few limited amount of people that are aware and they have to make sure that they don't trade or profit in any way. So no comment on that, but if there was anything, we will not tell you in any way. Well, can you talk then generally about what the process is for deciding whether or not to list a coin? Yeah, it's part of, you know, we have a lot of things. We look at customer demands. We look at what the assets offer if we can support it on the price. platform on the technical side, the way that the asset was created. It's a very long,

so I'm not going to bore you with all the details. It's a long spreadsheet with a lot of rows for every member of the listing committee. But overall, yeah, what we want to make sure is that, you know, the asset is safe for our customers. We can also operate safely as well. and there is no risk of, you know, attack on the network or something that could create customer loss for a customer. Okay. And this is just one question out of curiosity for your dealings with the SEC, which I know you don't want to go too much in a detail on that. But I did want to ask just because Robin Hood received its well's notice before the ether ETFs were approved, which, as I'm sure you're aware, it looked for a very long time, like they were not going to be approved.

And then at the last minute, suddenly they were. And so I wondered if even in those discussions before you received the wells notice, if it seemed to you like the SEC was trying to go after ether and say it was a security. Because also there was a news report that there was an investigation. into Ether. Yeah, you know, we can really talk about anything that is in progress with the SEC. I will just comment the same way that we did. Like, we were surprised by the Ethereum ETF news and we, you know, we welcome it, frankly.

Like, I think it's going to be a good thing for the industry. It's going to bring more accessibility to the asset. And we saw that it was beneficial for Bitcoin, you know, like having more institution in the space. And on Robinwood will be ready to lease the ETF when they are approved, fully approved and available. The same way that for Bitcoin, you know, they were available the next day. We had 11 of them. And, you know, I think it's a good thing for our customer. That way they can decide what they want to use to buy the assets.

They can either buy the underlying asset on Robin Crypto, or they can use their retirement account or their brokerage account to buy one of the ETF. All right. So in a moment we're going to talk more about Robin Hood's future plans with crypto, but first a quick word from the sponsors who make this show possible. Pocod is the original and largest layer zero blockchain with over 2,000 plus developers. And the anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Upgrading the infrastructure with eight times higher transaction throughput and twice as fast block times, perfectly tailored core time for the needs of every protocol, trustless bridges internally and into Ethereum, Cosmos, Needs, finance smart chain, and revised tokenomics and the implementation of a token burn to reduce inflation.

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As you mentioned earlier, you moved from, France to the U.S. And you also have more of a technical background. And yet here you are now in this position as general manager of Robin Hood Crypto. And I wondered if you could just talk a little bit about your trajectory from kind of more of that technical position to one where you do have to deal with business decisions, regulators, et cetera. Yeah.

You know, I've been more or less always in this combo. I started my career with creating my own startup in payment. and crypto. So I've always been kind of residual at a person, and I really like both of them. I think the technical side of thing is very interesting, but also sometimes I feel like as an engineer, we get stuck into just thinking technical.

And I think on the crypto space, that's one of the issue. We always focus a bit too much on how the underlying layer or how is the asset moving. And we forget sometimes that we need to make it easy to use for customers to actually engage with it. So I think this is kind of the best of the two world. I can focus on trying to expand accessibility and remove more barrier to entry to the crypto space.

And at the same time, I can still be very technical with the team and understand what they tell me and make sure that we can push in the right direction. But yeah, I joined initially Robin Hood as the CTO for the business, for the crypto business. and that moved to the general manager position happened like a couple of years ago and I think overall it's been a great thing

for our crypto business we've been able to streamline some of the decision and move a bit faster than we were in the past. And what's your overall vision for what Robin Hood crypto could be inside of the larger business of Robin Hood? I think really for us the goal is to really keep expanding

on the strengths of Robin Hood. I think, you know, if there is one company that is uniquely positioned to really move forward on the tokenization space, it's also revenue. And so we are going to keep working on that. We think that really crypto and blockchain technologies can be the way to bridge traditional finance and the world of today. And I think with blockchain, we'll be able to reduce costs and reduce some of the issue that we've seen in the past with Stratfi. So, you know, hopefully I think in the next few years, we'll see us making more and more moves into this direction of offering a better traditional product to our customers.

That's interesting. And when you talk about that, you're talking kind of more about tokenization of real world assets and securities. That's right. And what is your perspective on kind of the more crypto-native side of crypto and how that might fit into Robin Hood's business? Yeah, we think it's extremely important. I think that's why we launched our self-custody wallet last year. And we see it being done at a hundred and a thousand of time across the globe. You know, I think our point of view there is that we want to build the tool that our customer are requesting. And one of the things that we've seen is that people really love using Robin and crypto. They felt like the pricing was good.

They felt that they can use a product easily. but then when they were going into the Web3 kind of world, they were getting a bit more lost with some of the wallets that don't necessarily have the right UX, UI compared to Robin Hood. So we decided that we were going to try to bring what we've been famous for, this, you know, UXUI, and we'll bring it to the Web3 space and, you know, removing more of this barrier to entry.

I think a lot of the issues when you're using a wallet for the first time, he's trying to understand, like, what really is your responsibility versus what is the wallet responsibility. So we've engaged a lot in educational module that we can make the customer go through and understand a bit more, like,

how do you do a transfer, how do you use a DAP or these kind of things. But I really think that, you know, for the crypto world to really flourish, will need a bit of a combination of decentralized finance and also centralized finance for the people that don't necessarily need to have everything decentralized. All right. So, yeah, we're going to dive a little bit more into the offerings.

And let's start with the institutional business or the introduction of the institutional business, which will happen with this BitStamp acquisition, you know, as has been talked about since the news of the acquisition, BitStamp has, you know, a, a, a, a, a, a, institutional business and it offers things like a white label solution, sort of BitStamp as a service. You could call it institutional lending, staking. So, you know, where do you see Robin Hood going with that? Just will you simply continue BitStamps activities there or how might Robin Hood add those activities on that side of the business? You know, again, it's super early to really plan anything. Like we want to focus

on closing, but one of the thing that, you know, happened on a daily basis for us is institution calling us and asking, can we access Robin's platform? Like they do believe that we are a safety first company and that we are a good actor and that we are offering good features, but we've never really built that side of the, of the business. We've been focusing on retail 100%. So I think the combination of BitSamp and Robin Hood,

allow us to now serve his customers and offer institutional product. How are we going to bring the magic of revenue? It is a bit too early to say, but I do think we are going to keep investing in the offering and we're going to make it even easier and better for institution. And obviously we've seen in the last six months that now a spot ETS are coming to the US and already have come, at least in the case of Bitcoin. and probably will continue to come in the years ahead. So I wondered if we might see Robin Hood serving as a custody provider to ETF issuers.

Yeah, again, very early to say, you're asking me a lot of tough questions this morning. But I think it is definitely exciting. And I think we definitely want to see if we can maybe not just custody, but also provide liquidity or at least be part of that world of ETF. So definitely think that, you know, part of the institutional business that we are excited to acquire is also some of this element for sure. And so I obviously understand maybe not all the details are worked out, but when you sort of survey the landscape of the different types of institutions that Robin Hood might be engaging with, which ones do you feel are prime opportunities for your business? Oh, I mean, I think, you know, for that, we usually try to build our platform in a way that can scale. across different type of businesses. I think, you know, liquid provider, market maker, hedge funds, banks, you know, all of them

are exciting for the business and they are excited for Robin O'S country, that side of the world. I think, you know, I will say right now it really depends on how much we can use the feature on the platform that we built with this institution and then we'll focus on the market. I do think that it's going to be difficult for us to start from scratch, and that's where the acquisition makes a lot of sense. And so leaving Robin Hood aside, just when you look at how the crypto landscape has changed since the introduction of spot Bitcoin ETFs,

how would you say the institutional side of crypto is different in the last six months? We've seen a bit more, like, legitimately, I will say, on the fact that Bitcoin, you know, if you start to think about how people were thinking about Bitcoin 10 years ago, they were just thinking it's internet money and not really something serious. And now you think that you have a BTCTF and that a large institution are buying. You know, I think it shows that we went a long way. I don't necessarily think that it's doing anything. particularly different from before.

At the end of the day, just Bitcoin are being acquired and sold in different wallets. But I do think it brought a bit of stability to the market and making sure that we knew what was happening with Bitcoin. I think for East, it's going to be similar. We are going to see more institutions getting into space, and we're going to see them kind of stabilizing things a bit and making sure that is easier to stay,

and we'll see that hopefully in the future with other assets. And there's a lot of speculation about what the interest in Ether ETFs will be because of factors like there being an easier narrative for TradFite and understand around Bitcoin, the fact that there isn't staking that's offered, etc. what's your perception of how interested Wall Street is in either ETFs? You know, I think it's hard to say for me exactly, but I will say that, you know, usually I try to not underestimate people. I think the more people are getting educated with the space and the institution are part of this, right?

at the end of the days, they are just institutions directed by people, the more people get excited. I think you can look at East and the ecosystem that exists on Ethereum, thanks to in the past five years, the space has completely changed from where it was before

with just Bitcoin and assets like this. So, you know, I think a lot of people are going to be excited to see that they could be part of that new type of platform that are more decentralized. And I'm sure we'll see people being, you know, understanding it and understanding how sticking works, how does it help power the platform.

And I don't think that will be the main limitation for people to get into the space. And so if you were to put a percentage on how, what do you think might enter the ether ETFs in terms of percentage of assets in the Bitcoin ETFs? I couldn't tell you at all. You know, the ETF side are more on the brokerage side and a bit more focused on the crypto side. So I couldn't tell you at all.

Okay. Okay. It's a fun game that people like to play nowadays, though. So as you mentioned earlier, Robin Hood might get into this business of tokenization of assets and securities. And I wondered if you could just talk a little more about what that would look like. Is it something similar to a securitize where you're looking at? at public blockchains, you're providing kind of technical and compliance support to institutions

or, you know, what kinds of assets are you looking at, et cetera? Yeah, you know, I think we're still very early on that. And so I love to come back on the show to actually tell you when we are ready to announce it. But I think for us, what we see is just like all the benefit that blockchain could bring into real world assets. If you think about, you know, settlement, for example, like a few weeks ago, we, we, we celebrated settlements moving from T plus 2 to T plus 1. You know, this is not an issue on the crypto side, on the blockchain side. So we think that blockchain technologies can really change things and improve things.

And with this improvements, we will also be able to offer things at a better cost. Because if you don't have this settlement happening over multiple days, then you need less equities and you need to pay less fees and all this kind of things. So I definitely think that we can really change a way that things are working. And so when we're already to tell you more, I will be able to explain exactly the assets that we're looking to offer. Yeah, well, I wondered, though, if you could talk a little bit about those settlement times, because obviously, famously, there was that incident around the game stop and AMC stocks, where Robin Hood had to stop trading.

It was a controversial moment had to do with those settlement times. So, you know, what do you see as the potential for using blockchain technology in equities markets? Yeah, I think that's one of the market that is probably the more liquid and therefore tokenization can be really helpful. I think the settlement time will really reduce a lot of the pressure that there is on some of the companies. and I think we'll be able to really streamline things. There is not just settlement. There is also margin intra-day requirement. There is also, you know, fractionalization, being able to trade 24-7,

all of these things where we currently don't necessarily have the technology on the equity space, we'll be able to bring it with blockchain. So I think tokenization of securities and equities overall can be a huge step forward. And same thing around regulation. You know, like in the EU, they are already working on a sandbox called the LT and some actor already offering tokenized stocks there. So I think there is, you know, a path forward to have a better system in place. Yeah, honestly, when you initially mentioned it and I laughed,

it was because I was thinking about some memes I saw on crypto Twitter where people were making fun of making fun of that quote-unquote achievement. It is funny to see, you know, for people that have been in crypto in the past decade, you know, sometimes you're like, oh, great, some progress. So I was curious also to ask about the staking offering that you launched in Europe last month. It's only available in Solana, not in Ethereum. And I wondered what was behind that choice. Yeah.

We, you know, in the EU, we're still at the early days. I think we're launching a feature almost on a weekly basis. When I look at the team, I'm always very impressed by how much new things we're building on a daily basis. So we talked to our customers. Solana staking was one of the top requested feature

and therefore we try to put it in place. But I will absolutely think that we are going to do more than just Solana staking in the future. So you will just have to keep staying, to turn on the news, but I absolutely think that we've been excited to see the response on staking. We've seen a lot of our people engaging, a lot of our customer are engaging with it, and we've seen them actually engaging more than I thought. So, you know, we're definitely going to keep working on that.

And wait, just I'm reading between the lines a little bit of what you said. You talked about how there was customer demand for that. Are you seeing that there was more customer demand for staking on Solana than on Ethereum? him? You know, maybe not necessarily like more, but there was definitely a lot of demand. And so now also is a bit more easy in terms of the way you can stake and unstake. And so we thought that was very good first product to launch for us. And yeah, it's something that we do a lot. Any products that we build, we engage with customers through user research, who also get feedback on Twitter or on our customer support. And, you know, we take that into account. And we change the way. that we design and that we launch product for sure. All right. So now let's talk about some of the more crypto-native things you're doing. As you've mentioned, there's this self-custody wallet.

And I wondered if you could just give us a sense of, you know, how many downloads that's seen or, you know, what percentage of your customer base you think is using that? I don't know if we have exact percentage. But in terms of download, we saw 100,000 of download. I don't think I have an exact number. but it is something that we've seen, you know, a portion of our customer base engaging with it. And same thing with some of the more, you know,

crypto-advance feature that we have on the platform, like transfer, crypto transfer, for example, you know, not a very high, high percentage of customers that are engaging with it, but they want to be able to use it when they need it. And so we think the wallet is kind of the same thing where not 100% of our customer base is going to use the wallet because a lot of people don't trust themselves to save custody.

They own private key. They also don't necessarily want to engage in the space, so they prefer to stay on the centralized platform. But we've seen a lot of our customer asking to be able to engage into the Web3 space. And so that's why we've been building it. And overall, we get a lot of requests there as well. And that's also a thing where we keep launching new product. Very recently, we launch cross-chain swap.

And we've seen a lot of people engaging with it. And so we're going to keep building. The WebS3 space is very different. We were really excited to be the first to launch gasless swap in a major wallet. And we've seen people really happy with it. They were kind of getting confused on trying to swap an SOSP. an asset to another asset, but they need the gas token and the NLR to get it. So that's the kind of thing that I really like to do is spending time with our customers,

trying to understand what are the pinpoints, and then we try to solve it, and we then launch the product in that case. And, you know, as you're alluding to, so Robin Hood Crypto now also has this collaboration with the Arbitrum, so users can use Arbitrum directly from Robin Hood. And obviously there's many different layer twos that are available. So why did you choose Arbitrum? Yeah, there was many, many factor that we looked at. One of them was, you know, we felt like Arbitrum was one of the fastest growing layer

two in the space. You know, the LTV that there is quite high. And we've seen them innovating in the space quite a lot as well. So I think for us, it was a combination. of, like I said before, customer demand and also like what can we offer thanks to the partnership. And we've seen some of the product that we launched very recently on Arbitrum really getting a lot of usage and engagement. So that's the kind of things that, you know, we are happy with is when we build products that people are happy to use and excited to use again.

And so obviously I understand that this partnership is going well with you. And yet at the same time, we are seeing that there are other exchanges that are launching their own ecosystem chains. So, you know, the most notable of these is base with Coinbase. Oakex also has its own X layer. And I wondered if an L2 might be on the roadmap for Robin Hood. Yeah, you know, I think it's always something that I'm being asked. And I don't know if I have a very satisfying answer on this one, but I, like one, we don't necessarily have planned to share at this point. But if we were to do our own layer two, I think we'll want to bring something on the table that is differentiated. The same way that we've done almost all our product in the past, we only launched when we felt

like we could do something very different. And I think on the case of the layer two, at this point, we want to make sure that we can bring something on the table. Like, I don't think we need another layer two or layer one that exactly works the same way as the other platform. And so, you know, I think for now we are going to focus on finding, differentiating features before we work on them. But I do want to mention that on our wallet, for example, we are compatible with space, so you can engage with the chain as well. Like I said in the past, I think we at Robin, want to remove the barrier and we want to make people engage into the space safely.

And I think by that it also means that we need to have products that can work across all the chains and not necessarily just create another version of the chain and just limit the ecosystem to that. So I understand now, you know, in a way Robin Hood has this kind of spectrum of financial activity. There's, you know, your bread and butter that you started with, which is the equity is very centralized. Now you're clearly growing the crypto area, which has this combination of some aspects that can be centralized. There's obviously the whole decentralized area. that really is at the heart of crypto. And I wondered if you could just talk about how you think those

kind of two sides of finance will eventually come together or just what the future looks like, I guess, when the decentralized side is at maturity. I think it's going to be a combination of the advantage of each product. And hopefully we'll see more and more people using that. But, you know, for example, when we think about wire in the US. You have a lot of issues with them.

You can reverse them. And so as a merchant, for example, you think you're being paid, but then the wire is reversed and you have to deal with the fraud around it and the loss of the fund. Where in crypto, you know, you send a transaction and it's final and you don't need to worry about the fraud aspect of it. So I think this is what we're trying to bring on the table is that we now have a suite of product. between the brokerage, the Craigar, the crypto product, and more. And we think that when there is a space where we'll be able to combine the two, we'll look into doing it.

But I do think that for some of this product, we need to make them better before we can really expect, like, mass adoption on the crypto space. Oh, for sure, yeah. Clearly, on the decentralized side, it's still super early. So also, if I look at where Robin Hood is kind of in the broader landscape, I would probably call out Robin Hood and Coinbase is kind of converging into a similar competitive space.

And I wondered, you know, how you saw your, even geographically, if I think, you know, they're kind of making moves in the EU. So, you know, how do you see yourself competing with the likes of Coinbase long term? Yeah, I mean, you know, I think competition is good. I think if you didn't have competition, we will not be always pushed to innovate. I do think Coinbase is one of our competitors. And, you know, we've been pleased with the way that we've increased on market share in the US. And we think that we need to do that also elsewhere.

And, you know, Coinbase is a very crypto first player. and we are a bit more of a combination of financial products. So I think it's hard to compare them like side by side. I think, you know, for us, we have some advantages in the U.S., for example, you can buy stock, spend on your credit card, and at the same time buy Bitcoin all in one app. And you don't need to move funds between apps. I think Coinbase is more focused on crypto and, you know,

they are pros and cons. So I wouldn't say that we are like, you know, side by side, the same kind of company. Yeah, no, I meant there, I feel like they're converging on the same competitive space, but from opposite directions. So something else that I just needed to ask about, which didn't seem like there was an obvious place to fit in in elsewhere, but here we're in this moment where, you know, Roaring Kitty has come back.

There's, you know, this game stop volatility in mania or crashing or, you know, whatever is happening on any given day. Meanwhile, we're seeing that memes on Solana. are also taking off quite a bit. And again, there, you know, there's a lot of pump and dumps or, you know, whatever's happening there. And I wondered if you could just talk a little bit about, you know, where you think we are in this moment. Like, why, why do you think that this is popular? This kind of financial activity is popular? And, you know, do you see it as some integral part of the market? Like, you'll see commentary where people,

Some people deride it. Other people are saying this is kind of just part of market activity. What are, what's your take on all this? Yeah, I think, you know, on my side, I mostly focus on making sure that our platform is ready for, for this kind of movement. We've seen them in the past. I think Robin Hood is a very different company now that he used to be during like the first crazy days of Dodgecoin, for example, in 2021. And we've invested a lot in stability and scalability. We want to make sure that when there is a market event like this,

when a lot of people are suddenly coming into the platform and we're receiving a record amount of orders of XYZ, we want to make sure that we can stay up and serving our customers. So that's been my primary focus. I do think that these kind of market events are part of the business now. We know they are coming. We know when they are coming that we're already. And you've seen it, you know, in March, for example, when there was a lot of

crypto activity, we were available for our customers and we didn't have like any major issues. And that's really what I want to focus on. You know, I think at the end of the day, the market will use the product that they want and decide. I don't have a ton of, you know, understanding necessarily on why suddenly it's this sticker versus this. crypto, this kind of things. But what I want to make sure is that we are ready for it.

And do you see Robin Hood going to a place where it's listing, for instance, Salana meme coins? And I just ask this because in this moment, we're seeing the regulators go after kind of what people in the crypto community would consider more legitimate coins, but then the meme coin activity is less, or it just appears not to be targeted as much. So is that considered sort of a safe place? And because of Robin Hood's history, would that be a natural place for you to go? You know, the same answer, as I told you before, like, if we were to list anything, I wouldn't tell you. But I don't know if there is necessarily in the USA, a safer place in one direction or the other. I think we, like I mentioned before, like we need to have clarity

and that needs to apply to any type of crypto asset, not just mincoy, or not just mincoy. not just other assets. But I think on our side, there is also the question of customer demand and the big question, like I mentioned before, operation, like if tomorrow we need to list an asset, we need to make sure that we can actually serve it to the customer. So that any type of asset,

even like the new Serena meme coin, will have to go through our listing committee before we can put them on the platform. So when you talk about this listing committee, Can you name what factors they're looking at when they're trying to decide whether to list something? Yeah, I think I answered that before where it was, you know, it's a very long list of unheard of rows in the spreadsheet. So I won't bore you with the details. But some of them are, you know, operation and equity.

Like, can we for sure be able to operate that safely and offering a good price to the customers? And can we technically support it? The security aspect also is very important. you know, is the asset sufficiently decentralized that not one minor or validator could take over the entire asset and then decide of the future of the asset? So, you know, it's a lot of these criteria. And, you know, it creates a lot of question on our teams

and it takes some time also to review an asset. So we do that to list the asset and then we also quarterly review the asset on the platform and we make sure that DASDill the one that we want on the platform. All right. So at this moment in time, obviously we're seeing your, you've just received this Wells notice. There's an election coming up.

There's a lot of talk about whether or not Democrats in particular are warming up to crypto. And I wondered if you could just talk a little bit about kind of what you would hope would happen. You know, your company is facing these regular rate issues in the U.S. and people in the crypto community seem to view the industry as being sort of in the balance amidst these political wins. So what would be kind of your hope for how the politics around crypto plays out? You know, I think what's really important to me is that we stop ignoring the problem.

Like I think we, for a bit too long, there has been this constant discussion with the regulator and we haven't made any progress. And I think saying that crypto is now becoming kind of a topic is a good thing. You know, at this point, you can't ignore it anymore and you need to be clear with the constituent of what will happen and does an expectancy around crypto. So I think that's really what I've been excited to see. But overall, you know, I think having this clear regulatory framework, like I mentioned before, is going to be the right pass for the industry. We can't just talk about it during the presidential election.

We need to also make sure that there is an actual bill that is passed and that we can have now a clear passport. All right. Is there anything that I haven't asked you that you would like to mention for my listeners? No, I think you've been very thorough. So I'm excited to discuss more in the future with you when we have more news to share. Okay, perfect. Where can people learn more about you and Robin Hood Crypto?

You know, I think on our website and, you know, you can find anything that we offer and really just using the product and understanding what we do and, you know, hopefully give us feedback and we'll be happy to modify our product. Perfect. It's been a pleasure having you on Unchained. Thanks for having me. Did you know Unchained is much more than a podcast? Last year, we unveiled a completely redesigned website, enriching your experience for the latest news, insightful analysis, compelling op-eds, and comprehensive learning articles and guides for beginners. all this and more at Unchained Crypto.com. Thanks so much for joining us today to learn more about Johan and Robin Hood Crypto. Check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Matt Pilcher, Juan Aranovich, Megynavis, Pamajumdor, and Margaret Correa. Thanks for listening. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily, five days a week with host Noel

Atchison. Follow the CoinDesk Podcast Network for some of the best shows in Crypto. Thank you.