Robinhood agrees to buy Bitstamp crypto exchange for $200mn

Robinhood has agreed to buy European cryptocurrency exchange Bitstamp for $200mn, accelerating the US retail broker’s expansion outside its home market and into digital assets.

The Californian group said on Thursday its purchase of one of the world’s oldest cryptocurrency exchanges would also mark its first foray into targeting institutional investors. Shares in the company rose 5.4 per cent in early trading to their highest level since December 2021.

Robinhood is seeking to capitalise on a renewed wave of demand from investors for digital assets as the price of bitcoin trades close to its record high.

In recent months the broker has sought to broaden its app from “meme stocks”, the retail trading surge that catapulted the company into the mainstream with moves into credit cards.

It was at the centre of the share-trading mania of January 2021 that nearly overwhelmed the company, requiring a capital injection from shareholders to shore up its finances.

Its move outside the US also comes during intense US regulatory scrutiny on the crypto industry, following the 2022 collapse of exchange FTX and the subsequent 25-year prison sentence for its founder Sam Bankman-Fried earlier this year.

The broker warned last month that it was expecting a lawsuit from the Securities and Exchange Commission over its crypto business, which offers commission-free trading in 15 cryptocurrencies in most US states.

The SEC has filed a series of lawsuits against some of the largest companies in the market, including Coinbase and Binance, and Consensys has also indicated it is expecting a suit from the agency.

The approval of spot bitcoin exchange traded funds earlier this year has led to renewed optimism and interest in the industry, sending the price of bitcoin to record highs of $73,000.

“The acquisition of Bitstamp is a major step in growing our crypto business,” said Johann Kerbrat, general manager of Robinhood Crypto. “Through this strategic combination, we are better positioned to expand our footprint outside of the US and welcome institutional customers.”

Robinhood made 17 per cent of its transaction-based revenues from digital tokens last year and has stepped up its crypto plans, offering trading to customers in the EU from December.

Bitstamp was founded in 2011 and is headquartered in Luxembourg. It is the 16th-biggest crypto exchange by trading volume, according to CoinMarketCap data, and allows retail and institutional traders to buy and sell cryptocurrencies, as well as offering crypto lending and staking.

The exchange gained a UK registration last summer from the Financial Conduct Authority, and said it had more than 50 licenses and registrations globally.

Barclays Capital was the financial adviser to Robinhood while Galaxy Digital Partners advised Bitstamp.