By Jeff John Roberts
June 20, 2018

Robinhood’s stock trading app has won over millions of millennial investors with the promise of no commission fees—and ruffled the feathers of traditional brokerages in the process. Now, the company wants to run the same playbook on the cryptocurrency front.

“If you look at crypto, people are paying exorbitant fees for every transaction. We want to take this thing where customers are being price-gouged, and bring the price to zero,” Robinhood’s co-CEO Vlad Tenev told Fortune’s Jen Wieczner at the CB Insights Future of FinTech conference in New York Wednesday.

You may recall the Palo Alto-based company, which recently raised a mammoth $363 million Series D funding round, jumped into the cryptocurrency markets in February, and now offers Bitcoin and Ethereum for sale in 16 states.

Like Robinhood’s traditional equity offerings, customers can buy crypto without paying a commission fee, and even set a limit order to buy at a specific price. Tenev explained that the company makes money by charging interest on cash and stock-based assets it holds, and with its subscription product Robinhood Gold, which offers additional features like margin trading.

But with cryptocurrency, for which Robinhood’s premium services are not available, the business model is different: Robinhood’s goal is merely to “break even” on its crypto products, Tenev said—and to entice new Bitcoin-trading customers into Robinhood’s larger family of products.

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The initiative comes at a time when a growing number of companies, including London-based eToro, are seeking to compete with longtime crypto incumbents Circle and Coinbase. On stage, Tenev took at a swipe at his competitors, noting they typically charge commission fees of up to 4 or 5%, and called Coinbase’s fees “very high.” (The percentage Coinbase collects varies by the size of the trade, and can be as low as 1.5% for larger transactions.)

In the case of Robinhood, the question is how much of a threat its no-fee proposition—a concept the CEO of Charles Schwab, Walter Bettinger, this week derided as “disingenuous”—poses to competitors. The three-year-old fintech startup now boasts more than 4 million customer accounts, compared to Schwab’s 11.1 million.

Robinhood got off to a fast start in crypto, according to Tenev, who said it has signed up more than 200,000 accounts in a single day when it first launched cryptocurrency trading earlier this year. Still, while Robinhood hopes to offer Bitcoin and Ethereum nationwide by the end of this year, it has been hampered by regulatory constraints, slowing its rollout in certain states like New York, which requires cryptocurrency trading businesses to obtain a so-called BitLicense from financial regulators. Tenev said Robinhood is committed to entering New York and other states, but its timeline is unclear.

Meanwhile, Robinhood’s crypto competitors don’t appear to have the same competitive weaknesses that Tenev ascribes to traditional brokerages: outdated technology stacks, a large employee count and a struggle to attract tech talent.

“Some of these legacy companies run on paper and fax machines and mainframes,” Tenev said.

It’s a safe bet Coinbase and Circle aren’t struggling to wean themselves off fax machines. Nonetheless, if crypto investors become cost-conscious on trading fees, Robinhood could pose the same threat to them as it does to brokerages.

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