Robinhood is a mobile trading platform for a variety of assets, including cryptocurrencies. You can buy and sell stocks, ETFs, options, and cryptocurrency via the Robinhood app.
In this Robinhood review, we’ll look into all aspects of trading on the platform, including the fees, features, and possible issues, so you can decide if it’s the best choice for you.
Pros & Cons of Robinhood
- Provides an easy way to convert between crypto and fiat currencies
- Robinhood is a commission-free trading platform, which means you can trade cryptocurrencies, stocks, ETFs, and options without paying any fees.
- You can trade multiple assets on the platform
- The platform has a user-friendly interface
- Several payment options are available, including bank transfers, debit, and credit cards.
- Limited crypto offerings: Robinhood supports around 15 cryptocurrencies.
- The platform does not offer any investment research or news like other brokerages, making it more challenging to make informed investment decisions if you’re relying on it as a resource.
- You can’t trade mutual funds or bonds on the platform.
- Robinhood makes money by selling your order flow to high-frequency traders. This practice is controversial and has drawn criticism from some in the investing community.
- There have been several outages and glitches with the Robinhood app in recent years, which has caused frustration for many users.
The Robinhood trading app launched in March 2015 and quickly gained popularity as a commission-free brokerage service. The platform launched its Robinhood Crypto service in 2018, allowing users to buy and sell crypto on the app.
Unlike most brokerages or crypto exchanges, Robinhood doesn’t charge trading fees. Instead, the platform makes money from various avenues, most notably through its payment-for-order flow system.
That means all trading orders issued on Robinhood are delegated to a market maker that executes the order. In exchange, the market maker pays a commission to Robinhood at a rate of a fraction of a cent per share. Other revenue avenues include debit card and Robinhood Gold subscription fees, and net interest investments.
In 2022, The New York State Department of Financial Services fined Robinhood Crypto division $30 million for violating anti-money-laundering and cybersecurity regulations.
Robinhood became a publicly traded company in 2021. In 2022, it was revealed that Sam Bankman-Fried’s now-defunct trading firm, Alameda Research, owned a 7.6% share in Robinhood and used the shares to transfer $4 billion from FTX.
The fate of 4.5 million worth Robinhood shares remain a mystery as multiple parties, including Blockfi, now claim ownership of those shares.
The Robinhood board of directors announced a plan to buy up to 55 million shares, if the Justice Department and the SEC approve.
Crypto Coins Available on the Robinhood Crypto Exchange
Robinhood’s crypto offerings are meager. The platform supports only a few popular digital assets.
You can buy, sell, and observe real-time market data for 15 cryptocurrencies on Robinhood, including Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), Polygon (MATIC), Aave (AAVE), Cardano (ADA), Solana (SOL), Shiba Inu (SHIB), Dogecoin (DOGE), Stellar Lumens (XLM), Uniswap (UNI), Tezos (XTZ), USD Coin (USDC), Avalanche (AVAX), Chainlink (LINK) and Compound (COMP).
Fiat Currencies Supported on Robinhood
Robinhood supports USD deposits via bank transfers and debit card payments. Robinhood Instant account owners can use up to $1,000 of their balance to trade cryptocurrency.
If you earn funds from stock, ETF, and options trades, you can use your earnings to trade crypto after three business days. If you don’t want to wait that long, you can make instant cash deposits.
While debit card transfers usually take around 30 minutes, bank deposits may take up to 5 business days to settle.
Countries Supported by Robinhood
Robinhood Crypto is available in almost all US states except for Hawaii and Nevada.
You can use Robinhood when you are traveling around the world, with the exception of U.S. Office of Foreign Assets Control (OFAC) restricted countries and jurisdictions like Syria, Cuba, Iran, North Korea, and Crimea.
Robinhood Trading Fees
As we said before, Robinhood doesn’t charge commissions, so trading fees are not a big issue. Here is an overview of the fees for various types of trading, withdrawal, and accounts:
All stock trading is free.
The option trade fees are around $0 to $0.65 per contract.
The margin trade fees are around 4.00% annual interest rate on the loan amount (fees may vary based on the broker).
The cryptocurrency trade fees are $0.
Brokerage account fees
The account Maintenance Fee is $0.
The Inactivity Fee is $0.
The account fees of a Robinhood Gold account are $5 (a monthly fee). Robinhood Gold members have access to trading tools and level II market data via Nasdaq, among other perks.
Sending and Receiving Fees
Receiving cryptocurrency on the Robinhood exchange is free, but sending cryptocurrency incurs fees. You have to pay a dynamic fee based on blockchain network traffic when you are sending crypto.
Deposit and Withdrawal fees
There are no deposit fees on the platform, but withdrawal fees may apply depending on your withdrawal method and what type of account you’re transferring money to.
Withdrawing money to your bank account is free of charge, but withdrawing to an external debit card account will cost you a 1.5% fee. The fee is displayed when you initiate the withdrawal, so you’ll know how much you have to pay before completing the order.
You can also transfer assets or cash from the platform to an outside brokerage by paying a $100 fee, deducted either from your Robinhood account cash balance or from the receiving brokerage account.
You can’t transfer crypto to an external brokerage, but you can send it to an external wallet address. Robinhood deducts blockchain transfer fees automatically from your account.
Banks may charge you extra for wire transfers, and you may have to pay extra depending on the payment provider you use.
You can check out Robinhood’s website for more details on fees.
Main Features of the Robinhood Platform
Let’s see some of the most notable features of Robinhood in more detail.
Multiple Assets Under One Account
The platform supports multiple asset types, so you can manage all your assets from one account. You can buy and sell popular crypto assets like Bitcoin and Ethereum on the platform or exchange them for other assets EFTs (exchange-traded funds).
Robinhood released a non-custodial digital crypto wallet to allow customers more control over their funds. You can sign up for the beta version of the wallet on the Robinhood website.
The platform has an intuitive user interface. You can easily navigate between different assets and switch from one market to another.
While trading you can place market, limit, and stop orders. Robinhood also allows margin trading for stocks.
You can invest with a margin if you subscribe to Robinhood Gold premium ($5 per month). Robinhood Gold subscribers pay a margin rate of 7.25%, while regular accounts pay an 11.25% rate.
You must have 2000 USD in your margin account to execute margin trading. Robinhood Gold subscribers are exempt from paying interest for their first 1000 USD worth of trades.
How Easy Is It to Open a Robinhood Account?
Opening a Robinhood account is pretty easy. Go to Robinhood’s website and select the Sign Up button. Enter your legal name and a valid email.
You can download the Robinhood app on your device and sign up via the app. Once you initiate the sign-up process, you will receive a confirmation email in a few days.
Alternatively, you may be asked to provide some additional documents to verify your identity. Once you provide the relevant documents, it may take up to 7 days for the platform to confirm your application.
You must be over 18 years old or older and have a valid social security number to sign up for Robinhood. You must be a legal resident in the US, either as a US citizen, US permanent resident, or an immigrant with a US visa, to sign up. The platform doesn’t accept taxpayer identification numbers.
You can queue a deposit to your account before your account is approved. This gives you a head start as you are waiting for your account details to go through. As soon as your identity verification is complete, you can start trading.
Robinhood complies with AML and KYC policies as per FINRA rules and may ask you to upload documents like a driver’s license, state ID, passport page, bank statement, and social security card photo.
How Secure Is Robinhood?
Robinhood uses industry-standard security measures like two-factor authentication (2FA) and cold storage for crypto funds. Crypto assets are kept in multi-sig wallets.
A portion of the assets are insured against criminal breaches, including cryptocurrency theft and hacks, but Robinhood doesn’t disclose the amount of insurance.
As a US-based company, Robinhood complies with all AML and KYC regulations. However, the platform has been slapped with several fines in its history of operation due to several regulatory issues.
Robinhood Crypto is not a member of the Financial Industry Regulatory Authority (FINRA) or the Securities Investor Protection Corporation (SIPC). Robinhood was hit with a fine of around $65 million by the Securities and Exchange Commission (SEC) for misleading customers on the subject.
Robinhood was also charged with executing trades at inferior prices, leading to a 34 million USD loss for customers between 2015 and 2018.
The platform has come under fire for freezing trades during an intense trading period in 2021. It was also fined 57 million USD due to a system outage during a price volatility period in 2020. The authorities asserted that Robinhood misled its user base by concealing information and leading them to make risky investments. The company was ordered to pay around 12 million USD to customers.
Has Robinhood Ever Been Hacked?
Robinhood has experienced some security breaches in the past. In 2021, the company announced 7 million customers’ data was leaked by hackers.
In 2020, another hack resulted in the theft of personal data from over 2,000 accounts.
The company claims to have implemented more stringent security protocols, but no platform is 100% secure, so taking precautions with your personal information is always essential.
When creating your account, use a strong password and never share it with anyone.
Is Robinhood a Regulated Exchange?
As a result of the Securities and Exchange Commission’s (SEC) Regulation ATS, Robinhood is both a regulated broker-dealer and a registered investment adviser. As a result, Robinhood is subject to the SEC’s jurisdiction and must comply with its rules and regulations.
Robinhood Crypto is registered with FinCEN as a money services business. The platform complies with the requirements of the Bank Secrecy Act and money transmitter laws of U.S. states. As a publicly traded company, it’s more transparent than most crypto exchanges in the business.
How Does Robinhood Compare to Other Crypto Exchanges?
Robinhood can be compared to other brokerages that work with crypto, like eToro. Both eToro and Robinhood allow you to trade a variety of assets, including stocks and crypto.
Robinhood doesn’t charge fees for crypto trades, while eToro charges a 1% fee for buying and selling digital assets.
On the other hand, Robinhood only offers around 15 cryptocurrencies, while eToro supports around 40 cryptocurrencies.
If you are content with Robinhood’s limited crypto selection, the lack of trade fees is definitely a bonus. However, if you want to trade altcoins, eToro might be a better choice.
Both platforms offer industry-standard security measures. Robinhood has had a few security breaches in the past, and eToro has been accused of covering up security breaches.
In general, it’s a good idea to avoid storing huge sums of crypto in custodial crypto exchanges or trading platforms.
Does Robinhood Have an App?
Since Robinhood is a mobile-first broker, it should be no surprise that they have an app. It’s available for iOS and Android devices and is user-friendly.
One of the best things about the Robinhood app is that it allows you to trade stocks, ETFs, options, and cryptocurrency all in one place. This is highly convenient if you want to diversify your portfolio or if you want to trade multiple asset classes.
The app also has useful features like real-time quotes, price alerts, and a news feed. These features make it easy to stay on top of the market and make informed trading decisions.
Overall, the app is an excellent tool for anyone who wants to trade stocks or other assets on their mobile device. It is user-friendly and packed with features that will help you succeed in the market.
Robinhood Review: Final Thoughts
Robinhood is a popular trading platform for those looking to invest in stocks, ETFs, options, and crypto with zero commission fees.
The platform represents the middle ground between a crypto exchange and a regular online broker. While Robinhood does not offer traditional banking products and services, like checking or savings accounts, loans, and mortgages, you can still execute orders and trade crypto.
If you’re looking for a one-stop shop for trading several assets, Robinhood may be good enough for your needs. If you are trading crypto, a zero-commission fee schedule is quite attractive.
However, while Robinhood doesn’t charge fees for crypto, stock, and ETF trades, there are fees for options trading and other activities.
So, if you’re an active trader who frequently engages in options trading or makes other types of trades, you may end up paying more in fees than you would with a traditional brokerage.
Robinhood’s customer service has been criticized by some users. While the company has made efforts to improve its customer service in recent years, some users have still had negative experiences. If you need extensive customer support, Robinhood may not be the right choice for you.
Additionally, there are some safety concerns when using Robinhood, such as the lack of FDIC insurance and limited customer support options.
Ultimately, whether or not Robinhood is the right investment platform will depend on your personal investing goals and risk tolerance.
To learn more about other cryptocurrency exchange platforms, check out our post on the Best 22 Crypto Exchanges and 8 Alternatives.