Jay Z’s entertainment company Roc Nation, founded in 2008, has invested in Robinhood’s cryptocurrency trading platform. Arrive, a subsidiary of Roc Nation, stated in an official announcement that it has invested in Robinhood because of its vision to improve the accessibility of financial markets.
Arrive’s statement emphasized the importance of Robinhood’s cryptocurrency venture, adding:
“Robinhood Crypto (…) will bring commission-free trading of Bitcoin and Ether to the Robinhood platform.”
The investment is the latest instance of a celebrity rapper plowing cash into Robinhood’s free-to-trade investment platform. The company also has Snoop Dogg, Jared Lehto and Nasir Jones (also known as Nas) among its celebrity backers.
Launched last year, Arrive was created to partner with early-stage startups and provide them with brand services, business development, advisory and capital services to increase growth (it’s unclear that this would be all that useful for Robinhood since the company raised $176 million).
According to Robinhood, over a million users have applied to join the waiting list of Robinhood Crypto, a platform that enables anyone to trade stocks, exchange-traded funds (ETFs), and major cryptocurrencies such as Bitcoin and Ethereum simultaneously, using the same application.
The entrance of Robinhood into the cryptocurrency market is highly anticipated by the global cryptocurrency community because the majority of Robinhood’s customer base is from the traditional financial markets and trade stocks, ETFs, and commodities on a daily basis. The launch of Robinhood Crypto is expected to introduce many millions of existing users of the Robinhood platform to a relatively new asset class in cryptocurrencies.
A large portion of the crypto community is also interested in Robinhood’s potential to evolve into the first real competitor to Coinbase, which has become one of the largest companies in the sector along with Bitmain and Binance.
Although the launch of Robinhood Crypto is highly anticipated, Arrive’s statement revealed that Robinhood has only “over three million” users and is valued at US$1.3 billion. Existing companies in the cryptocurrency sector such as Coinbase and Binance (over 6 million users) have much larger user numbers and market valuations. Coinbase has well over 10 million users, and it surpassed the 10 million user mark in November 2017. In just six months, Binance has acquired over 6 million users, adding 1 million users per month. This had led some crypto commentators to speculate that Robinhoods impact on the crypto trading market might be overblown.
It is also quite likely that many of the 1 million users on Robinhoods waiting list, are existing customers of Coinbase and Binance and have applied to Robinhood Crypto to have a choice of cryptocurrency trading platforms.
It is still an optimistic sign that billion dollar companies outside of the financial and cryptocurrency industries are investing in cryptocurrency products and exchanges. Evidently, the cryptocurrency markets and most businesses within the sector are still in an early stage in terms of user activity, market valuation, and scalability.
Multi-million dollar investments in the cryptocurrency world by high-profile investors are beneficial for every party in the sector, including businesses and customers, because businesses can have more capital to maintain their operations and customers can benefit from competition in the sector.