By Sage D. Young, Unchained
Compiled by: Yangz, Techub News
As a financial platform with 10.9 million monthly active users and a $17.2 billion on-chain investment portfolio, Robinhood deserves the title of "cryptocurrency giant". Yesterday, Robinhood announced that it would acquire the cryptocurrency exchange Bitstamp for a final transaction price of $200 million in cash to expand globally outside the United States. Robinhood said the acquisition is expected to be completed in the first half of 2025, subject to normal closing conditions, including regulatory approval. At present, the two parties have reached an acquisition agreement. Barclays Capital will serve as the exclusive financial advisor to Robinhood, and Galaxy Digital Partners will serve as the exclusive financial advisor to Bitstamp.
Robinhood said that Bitstamp was founded in 2011 and has offices in Luxembourg, the United Kingdom, Slovenia, Singapore and the United States. According to data from CoinGecko, Bitstamp's 24-hour trading volume reached US$234.4 million.
To better understand the acquisition, Unchained spoke with Robinhood Crypto General Manager Johann Kerbrat. In addition to introducing the acquisition, Kerbrat also gave his outlook on the current cryptocurrency space, including the relationship between the U.S. Securities and Exchange Commission (SEC) and cryptocurrency projects, the current political landscape in the United States, and the reasons why Robinhood refused to list tokens.
Here are the highlights of the interview:
Six months later, what would be the best-case scenario for Robinhood to acquire Bitstamp?
Why did Robinhood and Uniswap Labs both receive Wells notices from the SEC?
Why is the lack of regulatory clarity in the US one of the main reasons we entered the EU?
Whether it is decentralized is one aspect that Robinhood considers when listing the token.
Q: First, please introduce yourself.
A: I have been working at Robinhood Crypto for over three years, initially joining as CTO. I have been an engineer my whole life, but I joined the crypto company back in 2010 when everyone was still wondering “why do we need cryptocurrencies”, “why do we need Bitcoin”, and “what is Bitcoin”. Now, Bitcoin is no longer a “problem”, and Wall Street institutions are buying Bitcoin through ETFs every day. We will see more active use cases with real users in the US and other countries.
Q: How long did it take to prepare for this acquisition?
A: Cryptocurrency and blockchain will continue to exist as the foundation of the future financial world. Currently, we are always looking for potential ways to accelerate the development of our business, and we are also always looking for potential mergers and acquisitions or ways to cooperate with other companies in the field.
I can’t tell you exactly how long we’ve been planning this, but we’re very excited about this deal. This acquisition helps with international expansion of cryptocurrencies and introduces Robinhood’s first international business, which is a great move for the company.
Q: How do you think Robinhood’s business in the EU will develop after the acquisition?
A: In general, we want to expand our potential market, and the EU market is a good one. Acquiring Bitstamp will really help expand our market size, as they have valid licenses and registrations in more than 50 countries around the world. They can bring us customers from the EU, UK, US, and even parts of Asia.
Q: From your perspective, what would the best-case scenario be six months from this acquisition?
A: To be honest, the deal was just announced and it will take some time for it to actually close. We expect it to go through all the processes in the first half of 2025, so the best-case scenario is that the deal closes smoothly and passes regulatory approval.
Q: Can you provide more information on the exact status of trading right now in terms of what regulators need to do? When you mention "regulators," do you mean U.S. regulators, EU regulators, or both?
A: Yes, both. So the completion of the transaction needs to be adjusted according to the actual situation, including regulatory approvals from several different regulators. In this regard, Robinhood's previous experience working with regulators such as the U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the New York Department of Financial Services (DFS) will be helpful, and we now have relevant experience in the UK and the EU. So overall, we don't expect any major obstacles.
Q: Uniswap responded to the Wells notice on May 21st. What did you learn from their response?
A: We share the same pain as Uniswap Labs. We also recently received the Wells Notice. The main takeaway for me is that US regulators need to clarify what is a security and what is a cryptocurrency. We strongly disagree with the view that any asset we offer on our platform is a security, and we have a rigorous process for listing any token or asset on our platform, including securities analysis.
We have been working hard to engage with the SEC in the past. As of this interview, we have met with them 16 times in an attempt to register, and at this point, we are extremely disappointed with their response and can only hope that they can clarify this as soon as possible.
Q: After multiple meetings with the SEC, were you still surprised that Robinhood received the Wells notice?
A: Of course, we are disappointed. We have always been proactive and tried to register when the SEC chairman publicly stated that cryptocurrency companies should be registered.
Q: Given the current crypto political landscape (the SEC’s action on an Ethereum spot ETF has sparked optimism, but several crypto companies have also received Wells notifications and the U.S. regulatory framework remains unclear), do you or Robinhood have any regulatory actions in mind?
A: The Financial Innovation and Technology Act of the 21st Century (FIT21) is a good path forward. It at least brings us regulatory clarity and a framework to follow. Robinhood, as both a broker and a cryptocurrency platform, we are regulated by FINRA, the SEC, and the New York Department of Financial Services. We know how to engage and work with regulators. If we still can't get regulatory clarity at this point, then obviously there is a problem. Hopefully we can see results from this bill and move forward. However, it is important to point out that the lack of regulatory clarity in the United States is one of the main reasons why we chose to expand into the EU market. In January 2025, the EU will have a clear regulatory framework, MiCA, and I am surprised that the United States is lagging behind the EU in adopting a clear framework for cryptocurrencies.
Q: Can you point out specific points in the current U.S. regulatory ecosystem that are significantly different from those abroad?
A: In fact, the regulation of cryptocurrencies is very different. For example, our SEC chairman said that cryptocurrency companies need to register with the SEC. Then, we have been trying to register, but have not been successful. Even if the registration is successful, there will still be issues related to the asset issuer.
At this point, just thinking about the millions of US customers who have cryptocurrency exposure but don’t have a clear understanding of the regulations is a problem. We took a safety-first approach, listing only 15 assets on the platform and never offering staking services. But the dilemma is that you can decide to be safe and still receive a Wells notice from the US SEC; you can also decide to be aggressive and still have problems.
Q: What is the most common reason Robinhood gives for rejecting a token from listing on the platform?
A: It depends on the specific situation, including whether it is decentralized. If it is a PoW chain, the issues to consider include whether there is enough decentralized mining capacity to ensure that the chain will not have rug pulls. If it is a PoS chain, the issues to consider include whether there are enough validators or whether the validator group is sufficiently decentralized.
Then there are operational factors like, is there enough liquidity for the token? Do we have enough methods to back the asset? Do we have enough market makers and liquidity providers to back it? So, there are a lot of reasons. I don't think any one reason is more important than the other. We want to take a safety-first approach.
Q: What do you think the SEC’s approval of Ethereum spot ETH means for the rest of the world?
A: I don’t know if this approval will mean a lot. But considering the fact that people didn’t really look to the U.S. for regulatory clarity in the past, the approval of the Ethereum spot ETF could allow more institutions to participate and give the cryptocurrency ecosystem more weight.
Q: Which blockchain networks/protocols are you currently active in, either professionally or personally?
A: On a personal level (non-investment advice), I have been trying to research almost every new chain to really understand what they bring, why they are different, and what types of applications are being built on the chain.
The chain I’ve been active on recently is Base. For me, it’s important to understand some of the applications on Base, such as Friend.Tech, and see how people are using it to understand where we need to do more work.
We've also been very active recently with Arbitrum, which we announced a partnership about a month or two ago, and that's something we're excited about.
Q: Robinhood’s user base is quite diverse, but among those who hold crypto, who are the most loyal and sticky users?
A: 50% of Robinhood’s investors are new investors, so they didn’t necessarily have a brokerage account before. We also have a very diverse customer base, with a lot of millennials and Gen Z. To me, that’s the most exciting. It really opens doors and closes the wealth gap between generations.
When it comes to crypto, we see a very diverse group of users. Some are very active traders who buy and sell a lot on the platform every day or even every hour, while some are older users who buy and hold for many years. The difficulty of my job is to meet the needs of all of them and build features that work for all of them.
