Written 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 portfolio, Robinhood deserves the title of "cryptocurrency giant". Yesterday, Robinhood announced that it would acquire the cryptocurrency exchange Bitstamp for a final transaction consideration 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 CoinGecko data, Bitstamp's 24-hour trading volume reached US$234.4 million.
To better understand the acquisition, Unchained interviewed Johann Kerbrat, general manager of Robinhood Crypto. 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 uncertainty of the current political landscape in the United States, and the reasons why Robinhood refused to list tokens.
Here are the highlights of the interview:
What is the best case scenario for Robinhood to acquire Bitstamp six months later?
Why is Robinhood "in the same process as Uniswap Labs" and has received the Wells Notice from the U.S. SEC?
Why is "the lack of regulatory clarity in the United States one of the main reasons for our entry into the European Union"?
Whether it is decentralized is one aspect of Robinhood's consideration of whether to list tokens.
Q: First of all, please introduce yourself.
A: I have been working at Robinhood Crypto for more than three years, and I originally joined as the CTO. I have been working in engineering positions all my life, but I joined the cryptocurrency company back in 2010 when everyone was still wondering "why do we need cryptocurrency", "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 by real users in the United States and other countries.
Q: How long has this acquisition been in preparation?
A: Cryptocurrency and blockchain will continue to exist as the foundation of the future financial world. At present, we are always looking for potential ways to accelerate the development of the business, and we are 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 have been in preparation, but we are very excited about this transaction. This acquisition helps with the 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 does help expand our market size because they have valid licenses and registrations in more than 50 countries or regions around the world. They can bring us customers from the EU, UK, US, and even parts of Asia.
Q: From your perspective, what is the best-case scenario 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 to go through all the processes until the first half of 2025, so the best-case scenario is that the deal goes through smoothly and is approved by regulators.
Q: Can you provide more information on the exact status of the transaction in terms of what the regulators need to do? When you mention "regulators", do you mean regulators in the United States, the European Union, or both?
A: Yes, both. So the completion of the transaction needs to be adjusted according to the actual situation, including regulatory approval from several different regulators. In this regard, Robinhood's previous experience working with regulators such as the 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 21. What did you learn from reading their response?
A: We and Uniswap Labs can be said to be "in the same boat". 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 a securities analysis.
In the past, we have been working hard to engage with the SEC. 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 only hope that they can clarify this as soon as possible.
Q: After meeting with the SEC many times, are 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 register.
Q: Given the current political landscape for cryptocurrencies (the SEC’s action on Ethereum spot ETFs has sparked optimism, but several crypto companies have received Wells notices and the regulatory framework in the U.S. 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 crypto platform, is 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 there’s obviously something wrong. Hopefully, we can see results from this bill and move forward. However, it’s important to point out that the lack of regulatory clarity in the U.S. was one of the main reasons we chose to expand into the EU market. In January 2025, the EU will have a clear regulatory framework, MiCA, and I’m surprised that the U.S. is lagging behind the EU in adopting a clear framework for cryptocurrencies.
Q: Can you point to specific points in the current regulatory ecosystem in the United States that are very different from those abroad?
A: In fact, the regulation of cryptocurrencies alone 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 we have not been successful. Even if we are registered, there will be issues related to asset issuers.
At this point, just considering the millions of American customers who have cryptocurrency risk exposure but do not have a clear understanding of regulatory regulations is a problem. We have taken a safety-first approach, listing only 15 assets on the platform and never providing staking services. But the existing 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 why Robinhood refuses to list tokens on the platform?
A: It depends on the specific situation, including whether it is decentralized or not. If it is a PoW chain, the considerations include whether there is enough decentralized mining capacity to ensure that the chain will not have rug pulls or something like that. If it is a PoS chain, the considerations include whether there are enough validators or whether the validator group is sufficiently decentralized.
In addition, there are operational factors, such as whether the token has enough liquidity. Do we have enough methods to support the asset? Do we have enough market makers and liquidity providers to support it? So, there are many 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 US 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 given the fact that people didn't really look to the United States for regulatory clarity in the past, the approval of the Ethereum spot ETF this time can allow more institutions to participate and make the cryptocurrency ecosystem more substantial.
Q: What blockchain networks/protocols are you currently active on, either professionally or personally?
A: On a personal (non-investment advice) basis, I’ve been trying to research almost every new chain out there to really understand what they bring to the table, why they’re different, and what types of applications are being built on them.
The chain I’ve been active on lately is Base. It’s been really important for me to understand some of the applications on Base, like Friend.Tech, and see how people are using it, to understand where we need to work more on it.
We’ve also been very active lately with Arbitrum. We announced that partnership a month or two ago, and it’s something we’re excited about.
Q: Robinhood has a pretty diverse user base, but among the people who hold crypto, who are the most loyal and stickiest 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.
In crypto, we see a very diverse group. Some users are very active traders who buy and sell a lot on the platform every day or even every hour, and some users are older and 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.
XingChi
