Robinhood’s Crypto Trading Revenue Plummets 18% in Q2 2023

Robinhood's Q2 2023 report released on August 2 shows a decline in crypto trading revenue. According to the report, the US-based crypto-friendly stock trading platform recorded an 18% decline in its crypto trading revenue in the second quarter of 2023.

The revenue dropped to $31 million in the second quarter from the $38 million recorded in Q1, representing 16% of the company's total trading revenue.

Crypto Trading Revenue of Robinhood Plunges Amid Adverse Economic Conditions

Though the decline was significant, crypto trading wasn't the only area of Robinhood's market impact. Its overall transaction-based revenues declined 7% to $193 million.

The affected areas include options revenues which saw a 5% drop to $127 million. Equities also recorded a loss, dropping 7% to $25 million in quarter two.

The decline in crypto trading revenue reflects the present state of the crypto market, escalated by several unfortunate occurrences like the Terra implosion, the FTX bankruptcy, and ongoing regulatory battles.

Due to heightened regulatory uncertainty in the US, Robinhood made some tough decisions. The platform withdrew support for several tokens labeled as securities by the Securities and Exchanges Commission (SEC) in the June lawsuit against Coinbase and Binance.

Robinhood Crypto delisted Cardano (ADA), Polygon (MATIC), and Solana (SOL) on June 27.

However, it continues to support the trading of 15 cryptocurrencies, including Bitcoin (BTC), Dogecoin (DOGE), Ethereum (ETH), and Avalanche (AVAX). The decision had not affected any other crypto listed on its platform.

In addition, Robinhood still holds $11.5 million in crypto assets under custody, the same amount held at the end of Quarter-one.

Despite the dwindling trading activities and revenue, Robinhood still produced an overall Q2 result exceeding the numbers estimated by analysts. The report noted that the company's total net revenues shot up by 10% to $486 million, while net interest revenue increased by 13% to $234 million.

The major driving factor for the increase in net revenue is the seasonally higher proxy revenue and increased net interest revenue. Also, the report stated that the increase in net interest revenue was driven by higher short-term interest rates, growth in interest-earning assets, and increased securities lending.

Robinhood Bucks Downturn, Moves on with Expansion Plans

Unfazed by the drop in transaction-based revenue, Robinhood is ramping up its expansion plans. The firm plans to launch its services in the United Kingdom by the end of 2023.

In line with its UK plans, Robinhood onboarded Jordan Sinclair, an ex-Barclays executive, as the new chief executive officer for its UK operations. Moreover, the UK Financial Conduct Authority has approved Jordan Sinclair's appointment as an enlisted Executive director and CEO for Robinhood UK Ltd.

As of the time of writing, Robinhood has yet to comment on the latest development or respond to requests from reporters.

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