ROBINHOOD Markets will acquire the European cryptocurrency exchange Bitstamp for US$200 million as part of the financial technology company’s expansion outside of its home market in the US.
The deal, which is expected to close in the first half of next year pending regulatory approval, is Robinhood’s first foray into the institutional business, according to a Thursday (Jun 6) statement. Robinhood’s shares jumped as much as 7.8 per cent, pushing the stock price to the highest since December 2021.
The transaction comes about a month after the US Securities and Exchange Commission (SEC) warned Robinhood that it faces enforcement action over its own crypto business. Robinhood, which is best known for stock trading, disclosed in May that the SEC’s enforcement staff had sent the firm a Wells notice, indicating that it made an initial determination to recommend enforcement action.
“Bitstamp has been trusted by its institutional clients for reliable trade execution, deep order books and industry-leading API connectivity,” Menlo Park, California-based Robinhood said. “With Bitstamp’s other institutional offerings like white label solution Bitstamp-as-a-service, institutional lending, and staking, Robinhood will enter the space with active and established relationships, infrastructure and industry-leading products.”
Robinhood has sought to expand its offerings beyond those geared towards retail traders in the US, adding credit card and retirement products. But it’s also eyed geographic diversity, rolling out its commission-free trading app in the United Kingdom this year.
The acquisition will help Robinhood attract and retain more users by expanding its cryptocurrency offerings, according to financial technology partners co-director of research Matthew O’Neill. Greater availability of crypto on the platform could help turn around an overall trend of declining usership following the height of the meme stock frenzy in 2021, he said.
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Robinhood’s expansion in European markets will help diversify its business away from the US, where regulation of cryptocurrencies is volatile and “politically charged”, O’Neill said. “Crypto regulation in the US is mired in a regulatory quagmire. It depends on who’s on what seat.”
EU crypto regulations
Bitstamp has licenses and registrations in European Union countries including Italy, Spain, the Netherlands and France, according to its website.
The EU’s first unified crypto legislation, called Markets in Crypto Assets, takes effect in January and license holders in member states will then have until July 2026 to obtain full MiCA permits. They can operate with existing licenses until then under a so-called “grandfathering clause”.
Barclays Capital advised Robinhood in the deal, the statement said, and Galaxy Digital Holdings advised Bitstamp.
“Bitstamp’s highly trusted and long-standing global exchange has shown resilience through market cycles,” Johann Kerbrat, Robinhood general manager of crypto, said. “By seamlessly coupling customer experience with safety across geographies, the Bitstamp team has established one of the strongest reputations across retail and institutional crypto investors.” BLOOMBERG
