Robinhood recently announced that it was listing the USD Coin (USDC) stablecoin issued by Circle on its popular stock trading app.
This would make it the first stablecoin to be made available to retail traders who are using the Robinhood trading platform.
It was in 2018 that Robinhood first introduced crypto trading on its platform and since then, it has been adding tokens steadily.
Currently, there are approximately 17 different cryptocurrencies that can be traded via its app, including USDC.
This move indicates that the business model of the company is increasingly focusing on crypto trading. Chris Koegel, the head of investor relations at Robinhood, had spoken at the company’s latest earnings conference.
He highlighted three of the main areas that the business is focusing on, which were crypto, money services, and brokerage.
Koegel stated that its goal is to become the most trusted platform that customers can use for crypto investments and for decentralized web as well.
He added that customers wanted them to add more tokens to their offerings. But, it remains unclear how the addition of the USDC stablecoin could affect the company’s reliance on order flow for making money.
Order flow and stablecoins
Most of the revenue generated by Robinhood is through routing the orders it gets to market makers, such as Citadel Securities.
Robinhood is paid for the information it can provide on the incoming orders of traders. According to the latest filing with the SEC, the company generates 68% of its revenue through order flow payments.
Some lawmakers have criticized this practice, including the SEC chairman, Gary Gensler because they consider it unfair to traders.
They believe that brokers and market makers have a conflict of interest. But, Robinhood is able to offer commission-free trading to its clients through this business model, which is a benefit for many.
The last two fiscal quarters had seen the company generate $420 million via order flow payments and $112 million had been generated through users trading cryptocurrencies.
This is more than Robinhood had earned from users trading equities on their platform, which was around $65 million, but it had earned $240 million from users trading options.
As far as USD Coin is concerned, it is currently one of the biggest stablecoins in terms of market capitalization, which has a total value of $50.1 billion.
There has been a slight fluctuation in its price over time, as it has climbed to $1.01 and has gone down to $0.995.
Tether is the only other stablecoin that has the largest market capitalization, which was launched in 2014, four years before USD Coin. Its market capitalization is currently $68 billion.
However, since the collapse of the algorithmic UST stablecoin, Tether has been losing ground against USDC.
While Robinhood may have listed USD Coin on its platform, Binance recently announced that it would be delisting the USDC stablecoin from its platform, along with two other stablecoins.