Digital stock trading platform Robinhood just released its crypto wallet to 2 million waitlisted users this week in a much-anticipated play that could have major implications for the emerging crypto sector. But it comes with some serious limitations.
Crypto trading has been available on the Robinhood app for about three years, and around $48 million in revenue came from crypto in the fourth quarter last year. But the new wallet—which stores digital currencies and can hold and retrieve digital assets—allows users to interact with crypto more directly.
The app’s users can now use the wallet to tip creators on social media with digital currency, and pay for NFTs. It will also allow users to send crypto to other wallet addresses by scanning a QR code, all without any withdrawal fees (just gas or mining fees)—a selling point that distinguishes Robinhood’s tech from other crypto platforms, the company said in a press release.Coinbase, another app where users can buy and sell crypto charges a 1% fee to convert and withdraw crypto to cash.
But the wallet has limitations that could also put off the crypto faithful.
It can’t hold NFTs, which are often another asset that diehard crypto enthusiasts hold along with digital currencies.
It also only holds cryptocurrencies that are traded on the Robinhood app: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, and Litecoin, according the company. And if you send the wrong coin to your wallet, you might be out of luck.
“Make sure you only transfer the coins listed above—any unsupported coins sent to your Robinhood account may be lost and the transactions are irreversible,” the company website says.
Robinhood’s list of accepted cryptocurrencies includes most of the major coins, but it still leaves out other popular tokens like Tether, Binance Coin, and Solana among others.
“We are building a foundation that will allow customers to explore the broader crypto ecosystem, and to build our customers’ most requested feature: the ability to withdraw and deposit their crypto,” a Robinhood spokesperson told Fortune in a statement Friday. “We’re continuing to improve our crypto offering and remain committed to making Robinhood the best place to invest in crypto.”
A crypto exodus?
Although the wallet is new, the ability for Robinhood users to buy crypto is not.
However, up until now, if you bought crypto on the Robinhood app, it would be trapped there—users were unable to transfer it to other crypto wallets. To claim the assets, a user would have to sell that crypto for fiat currency like the U.S. Dollar.
Now, 2 million users are able to move their crypto in and out of the app.
Immediately following the wallet launch, several Robinhood users on Reddit said they will use the new crypto wallet to transfer their assets into private wallets outside of the platform.
A spokesperson for the company told Fortune that the company was not concerned with customers moving their crypto assets out of Robinhood, and that its new wallet would draw more customers to crypto.
“We want to provide the best trading and investing experience in the industry, and we think this opens the door to more customers and capital for crypto. Increasing flows between customer investment accounts and the crypto ecosystem is great news for the entire crypto industry,” a Robinhood spokesperson told Fortune in a statement.
Robinhood’s crypto game plan
The Robinhood app added a massive amount of followers last year because its simple interface and commission-free trading allowed retail investors to pile into meme stock phenomenons like GameStop and AMC.
The company had 17.3 million monthly active users as of December 2021. Attracting those users to interact more directly with cryptocurrency could transform the entire industry.
