How Robinhood Will Make Money: Robinhood CEO Says Brokerage Plans to Run as Breakeven Business, is it Sustainable?

Robinhood, a stock brokerage has launched a crypto trading platform that does not charge any fees. It was launched in February 2018, and this platform aims to trade cryptocurrency as a breakeven business.

The company created a commission-free stock brokerage over 4 years ago and provided competition to the fee-based trading platforms at the time. Rather than charge fees for trades and stock, the company has opted to make profits from business interest on margin lending, cash balances, as well as premium services.

Zero fee crypto trading

When Robinhood made the announcement that it would venture into a zero free crypto trading business, the community reacted swiftly. Within only four days, over one million people signed up to have early access to the crypto app. This trend continued after some days, and the excitement brought in new customers in their tens of thousands.

With a massive influx of users who want to trade cryptos, it is tempting for the exchange to change their policy and add some charge for nominal trade, but Robinhood is staying true to its word.

The Co-CEO and founder of Robinhood, Vlad Tenev said that company doesn’t plan to make a lot of money from it in the foreseeable future.

His comment reinforces the statement the company made in January when the plan was announced, and he explained the reason for this decision.

He reiterated that the company’s value is growing in their customer base and also serving existing customers better. Robinhood is currently the 2nd most valuable privately held FinTech company in the globe, and it has more than 4 million users trading ETFs, stocks, and cryptocurrencies.

Customers are being ripped off

Tenev also believes that commission fees have become outdated considering the reduced cost of operation of brokers and modern online exchanges. The company’s approach is to make use of automation and technology in a bid to reduce costs for its customers. It plans to compete with the Bank of America as well.

 

Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.

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