Robinhood Applies In US For Bank Charter To Add Traditional Financial Services To Crypto Platform
Enticing institutional investors has been the goal of the crypto industry for the last two years, hoping to bring in some of that revenue to get out of the bear market. In doing so, there have already been multiple exchanges to launch products that cater to these users. However, the stock and crypto trading platform Robinhood has decided to expand their services as well, applying for a bank charter with United States regulators, based on reports from S&P Global Market Intelligence on April 19th.
Robinhood believes that the approval for the banking charter would be one of the preceding steps in allowing the platform to provide traditional banking services and products as well. It is likely that full-service banks would end up operating with the trading arm, which makes it possible for users to trade in crypto assets, options, and funds with either a smartphone or a computer. Based on statistics last years, Robinhood was the home to five million users that use crypto trading on the platform.
In December, Robinhood had to pull back on their attempt to offer checking and savings services to the customers in the United States. Before then, the platform had stated that up to $250,000 in deposits per customer would be insured by the Securities Investor Protection Corporation, a non-profit organization. However, Robinhood ultimately revealed that the only time that they guaranteed funds was in the purchase of securities.
When Robinhood decided to change their service to be “cash management,” there was a lot of criticism for their rebranding and the removal of deposit protection. Reports from Reuters say that politicians got involved with the case, accusing the company of lacking in full transparency to their 850,000 customers.
In other Robinhood news, the exchange reportedly will soon offer an initial public offering for their $5.6 billion platform, which recently received this valuation after an investment round last year. This valuation makes Robinhood the second-most valuable startup in the fintech industry of the United States.