Robinhood Seeks to Expand Its Crypto Offering by Adding Litecoin and Bitcoin Cash
Robinhood, one of the most popular stock-buying applications with millennials, and other young investors recently announced that it would be adding two more cryptocurrencies to its current list of offerings. The two new cryptocurrencies being added by Robinhood are Litecoin and Bitcoin cash.
These two additions, which currently represent some of the most valuable digital assets in the world are coming after Robinhood started offering Ethereum and Bitcoin in February this year. The two currencies are not only the most popular, but they also happen to be the most valuable currencies in the world.
Areas Where Robinhood Operates
As of now, the cryptocurrencies are only available in a limited number of areas, top among them being Texas and California. The delay in offering them in other parts of the country has been occasioned by licensing requirements that have to be met before it can commence its operations countrywide.
Its decision to offer Bitcoin and Litecoin cash is in no way surprising, as these are two currencies known to have very minimal regulatory risks. Robinhood is basing its decisions on the guidance that has been provided by the SEC. However, the same does not apply to the other more popular tokens, which have to be registered due to their close similarity to securities.
What Robinhood Has to Say About Its New Offerings
According to Robinhood, the service that it is providing provides its users with the ability to track cryptocurrency prices, including those of other currencies like Monero and XRP. It hopes that it can be able to add these cryptocurrencies to its list of offerings in the near future.
As has been the case with other cryptocurrencies, the prices of Bitcoin and Litecoin cash have since December been well off their highs. This occurred when the crypto markets went into a frenzy before the start of this year.
Although there are a number of many other companies, such as Coinbase and Square that are offering cryptocurrency, Robinhood is looking to offer a very distinct service. The difference lies in the fact that the latter does not charge any trading fees, or earn a commission from the trades executed by its users.
So if this is the case, the question now becomes, how does Robinhood hope to earn a profit, yet it is not charging a commission or a trading fee? The answer to this question was perfectly captured in an article posted in Fortune magazine in the month of June.
In the article, it was noted that companies like Robinhood and Square earn profits from the difference that exists between the purchase price, and the selling price. These are companies that purchase their cryptocurrencies from crypto exchange platforms, and then resell them to interested investors.
The companies, therefore, get to benefit from the profit spread between the purchase price, and their selling price. However, this can be quite tricky given the volatility associated with cryptocurrencies. But as their Co-Founder told the magazine, Robinhood is not looking to make a profit at the moment. It has only added this service to complement its brokerage services.