Does Robinhood Offer Crypto Trading?

·

Robinhood pioneered the commission-free stock trading model that most brokerages now follow. With its appetite for innovation in finance, it also emerged as one of the first mainstream robo-advisor platforms to embrace cryptocurrencies. This allows Robinhood users to access not only stocks and traditional financial instruments but also emerging crypto assets like Bitcoin and Dogecoin.

Understanding Robinhood Crypto Trading

Yes, Robinhood allows you to trade a select number of cryptocurrencies. The platform is particularly popular among beginners due to its user-friendly interface. Its commission-free trading model extends to cryptocurrencies, meaning users are not required to pay any transaction fees to the platform.

Compared to competitors, Robinhood features significantly lower charges. For example, Coinbase charges a 1.49% trading fee for most transactions. A $1,000 Bitcoin purchase on Coinbase would incur about $15 in fees, plus a spread or markup on the market price. In contrast, Robinhood only profits from the spread between the buy and sell price of crypto assets.

In terms of security, Robinhood supports a two-step verification process to add an extra layer of protection to user accounts. It also offers cold storage facilities and is a member of the Securities Investor Protection Corporation (SIPC), which insures investors' funds up to $500,000.

However, it's important to note that while cash claims are protected, Robinhood’s crypto operations are not covered by SIPC insurance. Additionally, unlike most crypto exchanges, Robinhood does not allow users to withdraw their crypto to external wallets. This means you can only buy, hold, or sell crypto on the platform—you cannot send or receive it from other wallets.

Supported Cryptocurrencies on Robinhood

As of late 2024, Robinhood supports the following seven cryptocurrencies:

Key Features of Robinhood Crypto

Robinhood aims to make trading accessible, especially for newcomers. Key features include:

The platform started as a no-fee stock trading app and has expanded into cryptocurrencies. Future developments may include lending and margin trading, as Robinhood has already patented an automated cryptocurrency purchasing system.

However, Robinhood Crypto is not without challenges. The platform’s reliance on crypto trading for revenue has drawn criticism, especially given market volatility. Crypto accounts for about 17% of the company’s revenue, with Dogecoin alone contributing 34%. Reports indicate that the number of users trading crypto on Robinhood has declined by 80% since its launch.

The platform also struggles to maintain its IPO value and retain customers during market swings. Its centralized approach is a drawback for crypto enthusiasts who prioritize decentralization and autonomy.

Is Robinhood Right for Crypto Trading?

Your decision to trade crypto on Robinhood depends on your goals. If you seek exposure to crypto price movements without the complexity of managing private keys, Robinhood is a viable option. The zero-fee structure is ideal for small-scale traders and beginners.

However, since all trades are executed through Robinhood’s centralized wallet, you do not own your private keys. This lack of control can be risky for large transactions or long-term holdings.

👉 Explore alternative trading platforms

Frequently Asked Questions

Can I withdraw cryptocurrency from Robinhood to an external wallet?
No, Robinhood does not allow withdrawals to external wallets. You can only buy, hold, or sell crypto within the platform.

What fees does Robinhood charge for crypto trading?
Robinhood does not charge transaction fees. Instead, it profits from the spread between buy and sell prices.

Is my cryptocurrency insured on Robinhood?
No, crypto assets are not insured by SIPC. Only cash claims are protected up to $500,000.

How many cryptocurrencies does Robinhood support?
As of late 2024, Robinhood supports seven cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Bitcoin SV, Dogecoin, and Ethereum Classic.

Is Robinhood safe for crypto trading?
Robinhood employs security measures like two-step verification and cold storage. However, the lack of external wallet support and insurance for crypto assets may pose risks.

Can I use Robinhood outside the United States?
Robinhood Crypto is currently available only to U.S. residents. International users may need to explore other platforms.

Alternatives to Robinhood for Crypto Trading

If Robinhood doesn’t meet your needs, several alternatives offer robust crypto trading features:

👉 Compare advanced trading strategies

Final Thoughts

Robinhood offers a simple, fee-free entry into crypto trading, making it appealing for beginners. However, its limitations—such as the inability to withdraw crypto and lack of insurance for digital assets—may deter advanced users. Evaluate your needs and risk tolerance before choosing a platform.