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Robinhood has announced plans to acquire global cryptocurrency exchange Bitstamp. On June 6, the two parties said they have an agreement for Robinhood to buy Bitstamp in an approximately $200 million deal.

The deal is expected to close in early 2025 and will expand Robinhood’s global reach as well as its prominence in the crypto space.

Details of the Deal

Robinhood has much to gain from its acquisition of Bitstamp. Bitstamp holds more than 50 active licenses and registrations to operate as a crypto exchange across a number of countries and will greatly expand Robinhood’s crypto footprint.

As part of the strategic combination, Robinhood will gain access to Bitstamp’s customer base, which spans the European Union, United Kingdom, Asia and the United States. Bitstamp also has a strong institutional client base, which Robinhood has historically lacked.

“The deal accelerates Robinhood’s international expansion, instantly giving it access to international institutional crypto clients without having to go through the arduous licensing processes across Europe and Asia,” says Drayton D’Silva, CEO and chief investment officer at Tower Hills Capital. “It also gives Robinhood revenue diversification.”

Robinhood expects the deal to be worth roughly $200 million in cash. However, that number could fluctuate somewhat as it is still subject to customary purchase price adjustments.

Both parties are anticipating the deal to close in the first half of 2025, subject to regulatory approvals and other customary closing conditions.

Robinhood used Barclays Capital exclusively as its financial advisor, and Galaxy Digital Partners exclusively acted as Bitstamp’s financial advisor.

Robinhood’s Crypto Business

Founded in 2013, Robinhood is arguably the best known investing app. The trading platform rose to popularity due to its commission-free trading and easy-to-use interface.

However, it has also faced criticism over the years for “gamifying” investing and for its practice of payment for order flow.

Robinhood’s first foray into the crypto industry came in 2018, when the platform rolled out commission-free trading of bitcoin and Ethereum. Since then, Robinhood has expanded its crypto offerings, adding many other cryptocurrencies to its trading platform. It debuted a crypto wallet in 2022.

More recently, crypto has played a significant role in Robinhood’s profitability and success. In the first quarter of 2024, the company attributed much of its record revenue to a 232% increase in revenue from cryptocurrency transactions.

As the company aims to further expand its crypto offerings, it makes sense that it would look to acquire an established cryptocurrency exchange.

Bitstamp, which was founded in 2011, is among the oldest crypto exchanges. It is known for its user-friendly platform and reasonable trading fees that make it an attractive choice for beginner crypto investors.

The State of the Crypto Industry

After acquiring Bitstamp, Robinhood will likely gain market share from major competitors like Coinbase. This comes at a time when the crypto winter seems to be in a thaw. Many regulators and politicians appear to be softening their resistance to cryptocurrencies.

Earlier this year, the Securities and Exchange Commission, or SEC, approved 11 spot bitcoin exchange-traded funds, or ETFs. More recently it took the first step toward approving spot Ethereum ETFs as well. That marked a significant reversal in sentiment toward cryptocurrencies from the SEC.

Now, Robinhood’s acquisition of Bitstamp is the latest piece of news indicating that the crypto industry is moving toward greater mainstream acceptance.

“For the wider crypto market, this deal could have several impacts. First, it could boost mainstream adoption and trust in cryptocurrencies, as more people see a well-known brand like Robinhood getting deeper into crypto. This might increase confidence among investors who were hesitant to dive in,” says Michael Baynes, co-founder and CEO of Clarify Capital.

“Second, it could push other financial platforms to improve their crypto services, leading to more innovation and competition. This, in turn, could result in better services and more options for users.”

Investors should keep an eye out as this deal moves forward. Time will show to what extent this deal makes Robinhood a major player in the crypto space—and what it means for the broader crypto industry.

According to Baynes, “The overall success of this acquisition will depend on how well Robinhood integrates the new platform and meets the needs of crypto investors.”

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Last Update: June 20, 2024