A representation of the cryptocurrency Dogecoin is seen in this illustration taken on August 6, 2021. REUTERS / Dado Ruvic / Illustration
NEW YORK / LONDON, October 29 (Reuters) - Investors clamor for Robinhood Markets (HOOD.O) To host shiba inu, a meme-inspired cryptocurrency that has skyrocketed in value this month, you may need to bide your time, as the app-based brokerage says it is in no rush to list new coins and analysts expect it to revenue growth comes from elsewhere.
Shiba inu is a derivative of dogecoin, which was born as a satire on a cryptocurrency frenzy in 2013, and has almost no practical use. However, its price has skyrocketed by as much as 1,000% this month, surpassing dogecoin to become the eighth largest cryptocurrency in the world with a market capitalization of $ 42 billion.
The coin rally has Robinhood users demanding a piece of the action.
the No. 1 question On Robinhood's Say Technology platform, which gathers questions from retail investors ahead of the brokerage's earnings call earlier this week, asked when it will add new coins like shiba inu.
Separately, a online petition Asking Robinhood to include shiba inu has nearly 400,000 signatures, while #SHIB was trending on Twitter with a deluge of "When #shiba" tweets targeting Robinhood.
Investors can buy shiba inu on some cryptocurrency trading platforms, such as Coinbase. Being able to trade it on Robinhood, which generally has lower fees than its competitors, would allow the company's users to move between crypto, stocks, and options on one platform.
The brokerage said this week that it plans to wait for more regulatory clarity on any new digital currency it may list.
Regulators globally have been cracking down on the rapidly expanding cryptocurrency market, including the U.S. Securities and Exchange Commission, which has said it is looking at various aspects of digital currencies, including offering and selling. of cryptocurrency tokens. read more
Robinhood currently lists seven cryptocurrencies, including dogecoin, which accounted for 62% of its cryptocurrency transaction volume in the second quarter, boosting its results.
The price of the modern shiba inu currency could lead to a similar increase in volume, but meeting customer demands on crypto can carry its own set of risks.
If investors continue to seek newer currencies with the prospect of faster returns, crypto platforms will need to stay on their toes to keep their clients happy, said Mati Greenspan, CEO of crypto advisory and analysis at Quantum Capital.
"For an exchange that could mean ... relaxing their path to acceptance by reducing due diligence and they could eventually end up accidentally listing worthless coins, or even scams," he said.
At the same time, as a brokerage "you never want to be the last ... to list a coin, because that's the point at which the price normally collapses," said Joseph Edwards, head of research at cryptocurrency broker Enigma Securities in London. "So as a result, there is a kind of chicken game between these exchanges."
"Brokers will always chase trends with regard to making it easier to access the market whatever the flavor of the month ... for the sake of their short-term profitability," he said.
Robinhood's revenue from cryptocurrency trading has grown 860% over the past year, as retail investor interest in cryptocurrencies increased, bringing the brokerage millions of new clients.
But that revenue slumped 78% from the second quarter, the company said earlier this week, far more than the around 35% industry-wide drop in crypto trading volumes.
Shares in Robinhood fell this week after the retail broker reported softer-than-expected earnings. read more
Founded in 2013 with a commission-free model that has become the industry norm, Robinhood gained popularity during the COVID-19 lockdowns, when sports and most other forms of entertainment were discontinued and commerce of so-called meme actions. became a national pastime among young investors.
Robinhood recently said that it will launch crypto wallets early next year, allowing its users to transfer cryptocurrencies to and from their Robinhood accounts, and on Tuesday said that more than 1 million people have subscribed to the service. read more
Unless the price of dogecoin rises again, and in the absence of the list of new coins, a successful launch of crypto wallets is essential for Robinhood's crypto revenue to return to near its second-quarter levels, said O 'Neill from Piper Sandler.
Reporting by John McCrank; Editing by Ira Iosebashvili and Daniel Wallis
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