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Robinhood Eyes Offering Crypto Futures in US, Europe Post Bitstamp Acquisition

Last Updated July 3, 2024 3:32 PM
James Morales
Last Updated July 3, 2024 3:32 PM

Key Takeaways

  • Robinhood signed an agreement to acquire Bitstamp for $200 in June.
  • Once the deal goes through, Robinhood could branch out into crypto futures.
  • Crypto derivatives trading volumes consistently eclipse spot trading volumes.

When Robinhood Markets inked a deal to acquire Bitstamp for $200 million last month, CEO Vlad Tenev cited  Bitstamp’s “global footprint” and “industry-leading products” as reasons for the acquisition.

In a sign that the firm is already preparing to leverage Bitstamp’s strengths, Robinhood is considering offering cryptocurrency futures contracts once the deal is finalized, Bloomberg reported  on Tuesday, July 2.

Robinhood Prepares to Branch Out into Crypto Futures

Since launching its cryptocurrency trading services in 2018, Robinhood’s crypto offering has been focused on the spot market. But the firm is now poised to introduce crypto futures trading.

According to sources cited by Bloomberg, Robinhood plans to list CME-based Bitcoin and Ether futures in the US and perpetual futures for Bitcoin and other tokens in Europe.

Bitstamp already lists futures contracts on a range of crypto assets. However, as with many exchanges, it restricts margin trading to more sophisticated users because of the unique risks involved. 

In Europe, Bitstamp’s ability to list crypto derivatives is backed by a string of licenses  in the EU and the UK. Meanwhile, Robinhood secured a US futures trading license through its acquisition of Marex FCM in March.

Derivatives vs. Spot Market

According to CCData, monthly derivatives trading volumes consistently eclipse spot trading volumes, accounting for around 70% of the combined total in May.

spot versus derivatives trading volumes
Monthly spot versus derivatives trading volumes. Source: CCData.

Given the size of the market, branching out into crypto futures could give Robinhood an important edge, especially in the US where some of the largest exchanges don’t offer the service.

Gaining a Competetive Edge

Consider, for example, that although Coinbase is one of the largest spot exchanges in the world thanks to its sizable American user base, perpetual futures trading is only available to non-US customers and Coinbase International doesn’t even rank among the top 50  derivatives exchanges.

Conversely, the Hong Kong-based crypto exchange Bitget has ascended to global prominence by doubling down on derivatives trading and completely ignoring the US market.

Because they provide a mechanism for hedging against price volatility and facilitating price discovery, crypto futures are an attractive option for both retail and institutional investors.

For Robinhood, the move to introduce futures contracts could attract traders seeking diversified investment opportunities and strategies to manage risk.

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