Robinhood Has 6 Million New Crypto Users – Who Don’t Really Own Assets

Robinhood, the globally renowned application for commission-free investing, has recently declared a 15x increase in their number of new monthly crypto traders compared to 2020’s average. The company has published a full-fledged report, titled “Crypto Goes Mainstream,” detailing this growth. 

Robinhood Crypto’s Soaring Growth in 2021

While primarily known as a popular stock app, Robinhood offers seven cryptocurrencies. These coins include Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, and Litecoin. In January 2021, more than 3 million new users purchased crypto assets using the services of Robinhood. The momentum remained more or less steady in February, with more than 2.9 million new users buying crypto coins. At a gross level, in the first two months of 2021 itself, the crypto user base of Robinhood expanded by 6 million. 

In 2020, the highest volume of crypto trade, leveraging the services of Robinhood, happened in July. With the imminent event of Bitcoin’s third block reward halving, the trade activity surged considerably with 401,000 users transacting on Robinhood Crypto. If we consider the entire 2020 year, the average number of new crypto traders on the platform was nearly 200,000 each month. 

Apart from the growth in the number of users, the platform witnessed an increase in transaction size as well. The average transaction size of almost $500 on the platform is a 100% increase when compared to the average of the first three quarters of 2020. 

The Nature of Crypto Transactions in Robinhood

With such significant growth in Robinhood’s crypto transactions, investors are becoming increasingly interested in knowing about its crypto features and services. The increased interest has led to increased scrutiny of Robinhood, which has raised a few questions about the nature of crypto transactions that happen through Robinhood. 

The most important of these questions is whether Robinhood Crypto buyers hold real crypto assets or not. The confusion over the type of ownership stems from Robinhood’s declaration as available in their “Cryptocurrency Transfers and Deposits” policy page. 

Can You Withdraw or Transfer Your Crypto Assets on Robinhood?

In its Coin Withdrawals policy, Robinhood states that the application does not “have the functionality to support coin withdrawals”. It goes on to say that it will inform its users if they start the withdrawal service any time in the future. 

If you can not withdraw your coin, should you be considered the holder of these assets? To ascertain this, we delved deeper into its crypto policy. The transferring policy of Robinhood Crypto states:

“At this time, we don’t have the functionality to allow customers to transfer their existing cryptocurrency assets into or out of their Robinhood Crypto account. We’re considering these features in the future, and we’ll update you as soon as they’re available.”

They end it by saying that they are considering upgrading these features in the future. So, as it stands now, you can neither withdraw your coins nor can you transfer them to some other account. 

Do You Know Your Wallet Address?

Moreover, in its wallet policy segment, the platform states that it doesn’t provide its users with access to their wallet or wallet address. If you can not withdraw or transfer your crypto holdings and if you do not know your wallet address, how can you leverage the assets that you hold? In reply, Robinhood’s policy says:

“You own the cryptocurrency assets in your account, and you can buy or sell them at any time. We’re evaluating features to allow you to safely transfer coins to and from Robinhood, and we’ll update you when these features are available.”

Although the policy of the platform goes on to say that, “you own the cryptocurrency assets in your account,” is it complete ownership if you cannot withdraw or transfer them whenever you want? This is the question that is on the minds of many crypto-investors and crypto-enthusiasts now. 

Do You Own Robinhood Crypto Assets — or Just Borrow Them from Robinhood?

For now, many industry experts feel that this can not be seen as total ownership of assets as users do not have the full right to execute any actions they want on their assets. Since you can buy or sell your holdings, using the services of Robinhood only, one can see it as a borrowing from the platform for as long as it is not sold. 

According to a tweet last week, the platform is in the process of further expanding its crypto services. We will have to wait and see whether they include the features of withdrawal of assets or transferring them to a platform outside Robinhood.

As of right now, the growing interest of centralized organizations in offering crypto assets only further strengthens the potential for a DeFi takeover.

Do you think the cryptocurrency transfer and deposit policy of Robinhood offers real ownership of crypto assets to its users? Let us know below in the comments.