Guest: Johann Kerbrat, General Manager of Robinhood Crypto

Compiled by: Peyton

Robinhood has been making headlines for its $200 million acquisition of European cryptocurrency exchange Bitstamp. The traditional financial app company’s push into crypto is paying off: its recent earnings report showed a big increase in revenue, and the acquisition of Bitstamp is just one way the company is expanding its market share.

Johann Kerbrat, general manager of Robinhood Crypto, discussed the acquisition, how Robinhood plans to expand its cryptocurrency business to international and institutional markets, the company's approach to listing crypto assets, how regulation affects its business decisions, and its efforts to build a bridge between traditional finance and decentralized finance.

How the Bitstamp acquisition could reshape Robinhood

For Robinhood, this acquisition will bring three significant changes. First, and perhaps most importantly, it will accelerate our international expansion into the cryptocurrency market. Second, as mentioned earlier, we will integrate a global scale cryptocurrency exchange into Robinhood. Finally, this acquisition marks the beginning of our first institutional business.

Bitstamp already has over 50 active licenses and registrations, which will help us attract clients from the EU, UK and Asia. On the institutional side, this is a key development. Robinhood has historically focused on the retail sector, while Bitstamp is trusted by institutions for reliable trade execution, API connectivity, and services such as crypto as a service, institutional lending and staking. This means Robinhood will enter the institutional space with a well-trusted and active business that already has established relationships in the market.

The market needs more trusted exchanges. Various incidents with competitors over the past five years have highlighted the need for trusted entities. With Bitstamp’s regulatory license and the trust it has built with regulators, combined with Robinhood’s resources, we believe we can create a strong and reliable trading platform for the future.

Will Robinhood list more coins and is considering more acquisitions?

In the short term, we do not expect significant changes. Bitstamp has always performed well within the regulatory frameworks within the countries in which they operate. In order to secure the numerous licenses they hold, it is vital to maintain close relationships with regulators and demonstrate a compliant business record. Therefore, we do not expect to change their operating model anytime soon.

Regarding the listing of new coins, we have a comprehensive listing framework that evaluates factors such as security, technology, and market liquidity. At this time, this acquisition has not prompted us to make any immediate changes to our coin listings. However, we are constantly evaluating the possibility of adding more features and products to our platform, especially in the United States.

Did unclear US cryptocurrency regulation influence the decision to acquire Bitstamp, and what jurisdictions Robinhood Crypto is eyeing besides the EU

One of the reasons we are focusing on the EU market is the clarity provided by the MiCA (Markets in Crypto-Assets Regulation) framework, which will come into effect in 2024. This framework will create a single market almost the size of the U.S. population, with a clear regulatory structure that we can follow. This clarity is critical to operating efficiently and in compliance.

If there is similar regulatory clarity in the US, we will also seek to fully comply and work closely with regulators. In the EU, while some details of MiCA are still being finalized, it represents a major step forward for the industry. As a French citizen, I am very excited about this development in the EU, and I hope that the US will adopt similar clarity in its regulatory approach.

Why Johann was disappointed with the Wells notice Robinhood received from the SEC

Translator's note: The "Wells notice" is an informal reminder issued by the SEC to U.S. listed companies before filing a civil lawsuit. Listed companies that receive the notice can communicate and negotiate with the SEC before receiving a formal lawsuit.

We don’t want to share too much about what’s going on with regulators, but at the end of the day, the reality is that the SEC Chairman invited crypto companies to come forward and register. He said it was just a process that needed to be followed. When that announcement came out a few years ago, we complied and registered. We’ve met with the SEC multiple times, which is why we were surprised and disappointed by the Wells Notice. If there’s a company in the U.S. that can work with regulators, it’s Robinhood. We are regulated and licensed by the SEC and FINRA on the brokerage side, and on the crypto side, we work with the New York Department of Financial Services (DFS), which is one of the strictest crypto regulators in the U.S. We know how to work with regulators and try to do the right thing when we’re asked to register. We’re disappointed, but we’ll continue to engage with them because clarity is needed in this space. We’ll continue to work hard to provide the products our customers want while engaging with the agency.

Johann US crypto regulatory wish list, and why Robinhood supports FIT21

Regulation is critical. In the past, we’ve seen competitors commingle between company funds and customer assets. At Robinhood, we always put safety first, even if it means moving slowly. This cautious approach allows us to maintain a stable and trusted platform.

Additionally, we need a clearer understanding of what constitutes a security. Many industry players are facing the same problem due to unclear regulations. Regulatory enforcement is not a viable solution; we need clear rules and a comprehensive bill that explains everything.

Why Robinhood delisted ADA, MATIC, and SOL, and the process for listing or delisting tokens on the platform

We have a comprehensive framework for listing tokens, which includes various analyses, such as operational analysis. The SEC's allegations have created uncertainty about these tokens and how we operate, which led to our decision to delist these assets. Regulatory clarity will be a huge benefit to the industry. Robinhood is more than just an exchange; we need a combination of an upright market maker and equity provider to provide buy and sell options for these crypto assets.

Johann’s background in crypto and trajectory at Robinhood Crypto

I've always been involved in the space where payments and crypto meet. I started my career by launching my own startups focused on these areas. I've always been passionate about both areas. The technical side is very fascinating, but as an engineer, it's easy to get too caught up in the technical details. In the crypto space, this can be a problem because we often get so focused on the underlying technology that we forget how to make it user-friendly. My role allows me to stay technically engaged with the team while expanding accessibility and removing barriers to entry in the crypto space. I initially joined Robinhood as CTO of our crypto business, and a few years ago, I transitioned to a general manager role. This transition streamlined the decision-making process and allowed us to move forward faster than before.

How Robinhood uniquely helps bring real-world assets (RWA) on-chain and how it handles product offerings for institutional investors

If there is any company that occupies a unique position in the tokenization space, it is Robinhood. We will continue to work in this space because we believe that cryptocurrency and blockchain technology can connect traditional finance with the modern financial environment. Blockchain technology has the potential to reduce costs and alleviate the problems previously observed in the industry. In the coming years, we aim to make significant progress in this direction and provide better traditional financial products to our customers.

The importance of the launch of a Bitcoin spot ETF to the market and Bitcoin

Bitcoin's legitimacy has been enhanced. Ten years ago, people thought Bitcoin was just money on the Internet and not something serious. Now, with Bitcoin ETFs and big institutions buying Bitcoin, it shows how far we have come. While this doesn't fundamentally change the nature of Bitcoin - it's still bought and sold in different wallets - it brings more stability to the market. We expect more institutions to enter the space, further stabilizing the market and making it easier for everyone to participate.

Why Robinhood decided to offer staking services, but only on Solana, not Ethereum

In Europe, we are still in the early stages and are launching new features almost every week. Solana staking was a feature requested by our customers, so we implemented it. We are considering more than just staking in the future, so stay tuned for new developments. We have seen very high engagement with the staking service, exceeding expectations, and we will continue to build on this interest.

The need for crypto native features on the Robinhood platform

While we don’t have exact percentage data, we’ve seen our cryptocurrency features downloaded thousands of times. A portion of our customer base uses advanced cryptocurrency features such as crypto transfers. While the percentage of customers using these features is not high, they want the option. Similarly, not everyone uses a wallet, as many don’t want to keep their own private keys or get deeply involved in this space. However, there is a great demand to get into the Web3 space, which is why we are building these features. Recently, we launched Cross Chain Swap and have seen high engagement. We were the first to launch a gasless swap feature in a major wallet, solving the pain point of customers having to pay fees when swapping assets. We focus on understanding our customers’ needs and solving their problems, which is what drives our product launches.

Robinhood’s partnership with Arbitrum and whether the company will build its own Layer 2

We considered many factors, one of which was that Arbitrum's growth as one of the fastest growing Layer 2 solutions has been very impressive. The total value locked (TVL) on Arbitrum is quite high and they are also very significant in terms of innovation. For us, it’s a combination of customer needs and opportunities for collaboration. Our recent launch at Arbitrum has seen huge usage and engagement, which is very satisfying as it shows we are building a product that our customers are interested in.

Johann’s thoughts on the meme coin craze and whether Robinhood will list these tokens

I think from my perspective, my main focus is making sure that our platform is ready for these types of changes. We've seen this before, and I believe Robinhood is a very different company now than it was in the early days of, say, the Dogecoin craziness of 2021. We've invested heavily in stability and scalability. When something like this happens in the market, where there is a sudden influx of users and record order volumes for specific assets, we want to make sure we can stay operational and serve our customers efficiently. This is my main focus. I do think these market events are now part of the business. We know they will happen and we prepare for them. For example, during a period of significant increase in cryptocurrency activity in March, we were able to service our customers without major issues. At the end of the day, the market will decide which products they want to use. My main concern is making sure we are prepared for these events, even if I don't fully understand why certain assets are more popular than others.

Johann on the political battle over cryptocurrency in the US

What's really important to me is that we stop ignoring this issue. For too long, regulators have been discussing it without making any real progress. Now that cryptocurrency has become a political topic, it's a positive development because it can no longer be ignored. Voters need to know what actions the next president will take with regard to cryptocurrency. But beyond discussions during elections, we also need to provide the industry with a clear regulatory framework through actual legislation. This will give us a clear path forward and help ensure the growth and stability of the industry.