Investing in Crypto on Robinhood
Robinhood is a commission free stock trading app that also allows users to trade crypto. The company offers a variety of ways to fund your account including linking a bank account or debit card.
The platform supports the trading of 11 crypto assets including bitcoin, ether, tether, Dogecoin, Bitcoin Cash, Cardano, Litecoin, Polygon and Solana. Robinhood also provides cost basis information for tax purposes when selling cryptos.
What is Robinhood?
Robinhood is a commission-free brokerage service that offers stocks, ETFs and options. It is available through its mobile app and website for United States customers with a bank account in the name of an FDIC-insured institution. It has no minimum balance or trade amount and it buys fractional shares. It earns interest on uninvested cash through its Cash Management program and shares a portion of that revenue with its users.
The signup process takes place within the Robinhood app and is typically completed in less than an hour. The company requires personal information including a phone number, email address and Social Security number. It also needs to verify a person’s identity and source of funding.
The company aims to democratize finance by offering low barriers to entry for stock trading. It sustains itself with four revenue streams: rebates from market makers and trading venues, Gold membership programs, stock loan income and income from uninvested funds.
How do I trade crypto on Robinhood?
Those looking to invest in the crypto market through Robinhood will be pleased to learn that there are no explicit commission fees charged on any digital assets traded on the platform. Robinhood instead generates revenue through spreads, allowing users to buy and sell their chosen cryptocurrencies at competitive rates.
To start trading, Robinhood offers a simple interface where users can choose their asset of choice. Users can even customize their charts to view the data they prefer in a convenient way. Then, they can execute trades on the basis of their research and study.
Additionally, Robinhood allows its users to increase their buying power with margin trading. However, this is an advanced feature that is not recommended for new investors as it comes with greater risk. Robinhood also provides tax information, including cost basis information, to help its users file their taxes. Users can also transfer their holdings to independent wallets to ensure complete ownership control.
What are the fees for trading crypto on Robinhood?
With Robinhood Crypto, investors can buy and sell a variety of digital assets that are backed by blockchain technology. This includes popular options like Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and Avalanche (AVAX) along with lesser-known cryptocurrencies.
In keeping with their mission of returning power to the people, Robinhood offers a straightforward and accessible cryptocurrency trading experience. Unlike other exchanges, Robinhood doesn’t charge explicit commission fees. Instead, these costs are rolled into spread markups that can reach up to 1.5% for some transactions.
With these costs in mind, Robinhood may not be the best choice for US-based cryptocurrency traders looking to gain comprehensive exposure to the crypto market. However, its low-cost approach to investing and regulatory compliance make it an appealing option for many newcomers to the space. Just be sure to keep in mind that the list of cryptos available on Robinhood is limited and may vary by state. Also, Robinhood only allows users to invest a maximum of 10% of their account balance in crypto.
How do I withdraw my crypto from Robinhood?
Robinhood’s popular zero-commission trading app recently launched a cryptocurrency wallet feature. The new wallet allows users to move their crypto in and out of the platform as needed, and to transfer it to other digital wallets. However, it has limitations that may keep some diehard crypto enthusiasts from using it.
Robinhood will not charge service fees for token transfers, but you’ll need to pay blockchain transaction processing fees (or “gas fees”) if you move crypto between Robinhood and your external wallet or dapps. These fees are typically higher for NFTs.
If you’re looking to transfer your crypto out of Robinhood, it’s important to understand the process involved. The best way to do this is to set up your account on a different crypto exchange that offers the digital asset you want. This will ensure that you can access the digital asset after transferring it out of Robinhood. Another option is to use a non-custodial cryptocurrency wallet, like Zengo. This is safer than a traditional exchange because it uses state-of-the-art MPC technology to protect your crypto.