The Robinhood app has been long awaited, but now, those on the long waiting list can finally begin to use it, as trading is now open for Bitcoin
. The app team, tweeted;
“Texas, we’re not messing with you. You can now trade Bitcoin and Ethereum commission-free, on Robinhood crypto.”
The Abra app on the other hand, chose the approach of synthetic crypto coins, offering more than 20 digital assets.
Robinhood is trading on a state by state basis; however there are plans to unroll its services to European Union investors
in the future. Users of the app might be used to more traditional trading, making the volatility of crypto coins very unusual for them, but the app allows users to buy crypto in very small amounts.
Although this could change, there is currently no margin for trading, and the coins are not considered to be a collateral, which means that users are required to have funds in their account in order for them to generate a trade. It only allows orders in a limited range, which cuts the volatility from directly participating in the crypto market, which would means Bitcoin and Ethereum trades more like traditional ones, which will in theory, prevent sudden gains or huge losses.
The trading of crypto coins is done through a separate entity, using different rules. Robinhood says;
“…cryptocurrency trading is done through an account with Robinhood Crypto, LLC. Robinhood Crypto is not a broker dealer and is not a member of the Financial Industry Regulatory Authority (FINRA). Robinhood Crypto is also not a member of the Securities Investor Protection Corporation (SIPC), which means your cryptocurrency investments are not protected by SIPC”
Both Bitcoin and Ethereum are the basis of many trading products where the traders do not own the assets outright. The high liquidity of the assets have been used to generate Exchange Traded Notes on NASDAQ Nordic, and the Robinhood app allows its users to track another 14 crypto assets.