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The popular stock trading app Robinhood listed Circle’s USD Coin () earlier today, the first available to retail traders on its platform.
Robinhood first opened the door to trading crypto on its platform in 2018. Over time, it’s been steadily adding tokens. As of this writing, there are currently 17 different cryptocurrencies users can trade using Robinhood’s app with the addition of USDC.
The move signals an increased focus on crypto trading as part of Robinhood’s business model
— Robinhood (@RobinhoodApp) September 20, 2022
During its latest earnings conference, Robinhood’s CEO, Vladimir Tenev, identified crypto trading as one of three main focuses for the business, along with brokerage and money services.
“Our vision with crypto is to be the most trusted platform for customers to invest in crypto as well as the most trusted on-ramp to the decentralized web,” Tenev said, according to the firm’s earnings note. “Customers tell us that they want us to introduce more coins onto the platform.”
However, it is unclear how adding Circle’s stablecoin, which has a price that’s pegged to the value of the dollar, could conflict with Robinhood’s reliance on payment for order flow to make money.
Robinhood, order flow and stablecoins
The company makes a majority of its revenue by routing orders to market makers like Citadel Securities, which pays Robinhood for information on people’s incoming trade orders.
According to its latest 10-Q filing with the SEC, 68% of the company’s revenue comes from payment for order flow. The practice has been criticized by some lawmakers, including SEC Chairman Gary Gensler, as potentially being unfair to retail traders due to conflicts of interest between market makers and brokerages.
However, the business model allows Robinhood to offer commission-free trading to investors that use their platform, which many enjoy as a benefit. But it comes at the expense of fractions of a cent being gleaned from each trade retail traders make.
The company took in $420 million from payment for order flow over the last two fiscal quarters, $112 million of which came from users trading crypto, according to Robinhood’s SEC filing.
That’s more than it received from people trading equities on its platform at $65 million but less than those trading options at $240 million.
USD Coin is currently one of the largest stablecoins by market capitalization, with a total value of $50.1 billion, according to CoinGecko. Over time it has fluctuated slightly in price, to a high of $1.01 and a low of $0.995 over the past week.
The only other stablecoin with a larger market capitalization is Tether, which was launched four years before USD Coin in 2014. The current market capitalization of Tether is $68 billion, but it’s been losing ground to USD Coin since the collapse of Terra’s algorithmic stablecoin, UST.
A Robinhood spokesperson told Decrypt the company’s CTO and General Manager of Robinhood Crypto, Johann Kerbrat will provide additional context regarding the listing at Circle’s Converge22 conference in San Francisco next week.
The spokesperson said they could not provide any additional comments at this time.
Editor's note: this article has been updated to correct the attribution of Robinhood representatives.