Robinhood to acquire Bitstamp crypto exchange in $200 million deal
Popular stock trading app Robinhood is putting its money on digital currencies, announcing Thursday that it will acquire crypto exchange Bitstamp for about $200 million.
The deal marks the trading platform's biggest-ever push into the digital assets industry, the company said in a statement Thursday, and will make it a competitor to larger crypto trading firms like Binance and Coinbase. The deal is expected to close in the first half of 2025.
The transaction comes as some of the country's biggest financial companies introduce products aimed at ordinary investors eager to put money in digital currencies.
"The acquisition of Bitstamp is a major step in growing our crypto business. Bitstamp's highly trusted and long-standing global exchange has shown resilience through market cycles," Robinhood Crypto general manager Johann Kerbrat said in the statement. He added that the acquisition will allow Robinhood to grow its footprint internationally and acquire institutional customers.
Robinhood is an online trading platform that promotes commission-free investing. It's the equivalent of an online brokerage firm, but doesn't complete client trades. Instead, it sends them to other trading firms, that match buyers with sellers of stocks and pay Robinhood a commission on the trades.
"Bringing Bitstamp's platform and expertise into Robinhood's ecosystem will give users an enhanced trading experience with a continuing commitment to compliance, security and customer-centricity," Bitstamp CEO JB Graftieaux said in a statement.
Indeed, Robinhood's recent profitability has been tied to its fledgling crypto business. The company reported a profit of $157 million or 18 cents per share for the first quarter, beating analyst estimates. Its profits were driven in party by high crypto trading volumes.
"[C]ompanies like Robinhood see there is probably a lot more growth in all things related to crypto than there is just remaining a traditional equities and options brokerage," Columbia Business School professor Omid Malekan, an expert on the crypto industry, told CBS MoneyWatch. "It makes sense that they are acquiring an exchange that brings with it a few different things they don't have today."
After the Securities and Exchange Commission approved spot bitcoin exchange-traded funds, industry giants including BlackRock, Fidelity Investments and Franklin Templeton raced other players to roll out crypto ETFs. These investments allow buyers to gain exposure to bitcoin without directly owning it, among other benefits.
Malekan expects to see more traditional brokers entering the crypto space.
"If you combine this acquisition and more traditional brokers partnering with crypto exchanges and the success of the bitcoin ETFs, then I think we can conclude that access to investing in crypto products is going to become much more widely available," he said of the Bitstamp deal. "And it's also going to become available through service providers, or in formats people are already familiar with. There are a lot of potential investors who like getting exposure to crypto assets via traditional service providers, and Robinhood is clearly planning to expand that."
Christian Catalini, founder of MIT Cryptoeconomics Lab, told CBS MoneyWatch that the deal "marks a new chapter for crypto."
"Previously, mainstream entities only dabbled in it, but now they are placing significant bets on its future role in payments and financial services... This move is part of a broader trend of mainstream fintech players becoming crypto players, and the other way around," Catalini said.