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You're listening to Bloomberg businessweek with Carol Massar and Tim Stanvak on Bloomberg Radio. An interesting take from analysts at Bernstein and Piper Sandler this week. They argue that Robinhood's revenue from prediction markets is set to overshadow that from cryptocurrency trading starting as soon as the second quarter.
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B
Yeah, that's pretty significant. I mean, we're talking so much more about, you think about it, prediction markets. The establishment financial firms increasingly looked at it. It's something we actually talked about with the CEO of Charles Schwab yesterday, Rick Worster.
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C
Yeah. Johan Kerberot is here with us now. He's senior vice president and general manager of crypto over at Robinhood. He's also runs the international business as well. He joins us here in the Bloomberg Interactive Brokers studio. Welcome, welcome. How are you?
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D
Good, good. How have you been?
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Yeah, we've been good. It's good to have you back here in New York. Welcome back. We've got this decline in crypto trading and I think many people would argue it's it's related to the price action that we've seen since October, but at the same time a catalyst in prediction markets with the World Cup. I'm just wondering how you're thinking about this, this universe of these two different elements of trading and how that affects your users. Like are they doing less on crypto and more with prediction markets?
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D
We haven't seen that in our data when we look at our customer engagement on the platform. We do have contracts on the prediction market platform that are related to crypto index, price and crypt actions. But overall I think it's just one of the cycle where we see a bit the sentiment in crypto a little down and overall we are just focusing on building new tools and new features that people can utilize when the sentiment goes up.
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C
So when the sentiment goes up, not if the sentiment goes up like you're confident it will go up.
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D
You know, we've seen all of these different cycles a lot and I think this is not our first time, not our first radio. And I think the sentiment will come back with. We saw it with the launch of our Robinhood chain July 1st. We've seen very good metrics already. 105 million transaction on the platform.
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C
So explain what that, what the impetus behind that was and why you guys launched that now.
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D
Yeah, we really wanted to create an infrastructure and a backbone for creating new products that brings the value of Defi and blockchain technology to our traditional finance systems. And so one of the first products that we launched with this chain is called Robin Earn. That gives you approximately 7% on the dollar that you're lending to the protocol. And I think it's really giving you the best of two worlds. The high yield that you can get from Defi and also the simple UX and UI that you can get from a platform like Robinhood.
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B
What do you guys really want to be? Prediction markets, Crypto. You've got a platinum card, like there's a lot of stuff. And I think some our critics might say wait, you just kind of are chasing what seems to be popular. So what is it that you really want to be?
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D
I think for us the main goal has been to be this all in one platform for all your financial needs. And for that you need to cater to customers at different stage of their life. From the very young people that are starting to think about retirement, opening their first retirement account on Robinhood like an ira, to the more advanced customers that want to use agentic trading or AI tools. And also at the same time, banking, Rails and credit cards are still something that you need on a day to day basis.
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B
But why not go to the establishment to say we talked to the folk, you know, Rick Worcester over at Charles Schwab. But why not go to the establishment who are also embracing kind of the new innovation, if you will, in finance?
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D
Yeah, we absolutely are as well. If you see our market share and the growth of our business, it shows that we've been able to grab some of these customer from this more established businesses. But I think for us it's been important to have a wide array of features and functionalities. If you think about our credit card, we launched a gold credit card. We have more than a million customer now with this credit card. It really shows that there are a lot of things that we are used to on the, on the financial side that we can disrupt and Robinhood by launching the gold card with 3% cash back on almost everything really changed the way that people were utilizing credit cards in the business.
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You know, on the crypto side of things, on our, on our crypto show yesterday we spoke to Nathan Dean of Bloomberg Intelligence. He, he said he actually agreed with Treasury Secretary Scott Bessant who said that we're at the 10 yard or the 1 yard line, excuse me, 1 yard line with the Clarity act in the Senate, if that passes this year, what does it mean for your business?
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I think it really changed the way that we can launch product in the US Right now we have a very fragmented situation where some states will have access to some features and not and it's something that really frustrate our customers. So we want to be able to launch products across the entire US the same way that we are doing that in other region in the world like EU for example. The second thing is a lot of institutions want to get into crypto. They understand that there is a value using stablecoin or tokenized asset, but they don't want to do it for the short term. If they don't have clear regulation, they are not going to be able to launch a project that will take five or six years to build. So it's really important to get this Clarity which you know, the name of the act is very apropos because we can after this bill really have a lot of institution company like ours invest in a long time for blockchain technologies.
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B
What's you know, how do you think about John politics and midterm elections and changes in the administration. This is certainly an administration that has been much more embracing, if you will, of digital assets. But I'm just curious how you guys factor it in and think about it in terms of strategy or what you might need to get done or think about before the midterms or how you're thinking about it afterwards.
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D
Well, if you think about Robinhood, it exists since 2013. Right. And so we have seen very different administration across the existence of the company and where I used to work with different administration. Hopefully I think this time when you see the entire world actually embracing crypto regulation, you think about MICA in the eu, you think about the FCA in the UK creating a new framework. We really saw a situation with the previous administration where the US were falling behind and crypto companies wanted to actually build outside side of the us So I think it's important that no matter the direction of the next administration will be that we have comprehensive regulation to embrace the technology and make people build in America.
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C
Again, you are also over, you oversee the international business as well. And I'm just curious about the timeline or the pipeline that you have for products that we may not have in the US but you can have overseas or, or have overseas but not have here in the us like what is the breakdown right now?
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D
Yeah, one of the main product we have overseas and not in the US is crypto perpetuals or future perpetuals. It's a primitive that was invented by crypto technology. And we are seeing a lot of demand from our customers. And you see platforms that are decentralized, seeing a lot of volume coming from
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like a hyper liquid, for example.
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Like a hyper liquid, for example, in the EU we have it available for crypto contracts, but also for commodities and ETF contracts. And it's something that we see a lot of engagement with.
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Meaning you think that it would be something that could happen here in the US at some point?
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I think so. I think there are still some discussion happening at the CFTC level, but it sounds like it's something that we are looking to open in the US at the regulatory level and we have the technology ready to use. So the day that we have clear regulation, we'll be able to launch it.
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C
You know, one thing that, that we always try to, to get an understanding of is what people are doing on a specific platform, what they're doing in different parts of the world. We talk to a lot of folks who are managing money and about asset allocation. What about outside of the US demand for US stocks right now? What does that look like?
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D
It's still something that we are investing a lot. So we launch our tokenized assets, we call it stock tokens, that give exposure to U.S. stocks and ETF. And in a lot of places, including in Europe, you still have platforms that still charge commission. For example, one of the biggest ones still charge at least €1 per transaction when you want to buy a stock. So giving access to this stock token has actually been a way for them to access it without paying commission fees. We launched actually a study with European customers and more than 50% of them were interested by this type of product. And a lot of them were interested by the fact that you can trade them 24, 7 as well because on the weekend the world doesn't stop. And so the economy also has an impact. And also the fact that the time zone is very difficult Right when the US market is open is often night for the eu. So I think that's a kind of evolution that we'll see from the blockchain technology that will bring Tri Fi into a new world, basically.
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B
What about things like the SpaceX IPO? And I'm just curious how that impacted or what kind of activity you guys saw around that. And then how you are thinking about the upcoming IPOs, whether it's open air, anthropic.
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D
Yeah, we have a platform called IPO Access where customer can actually place demand and based on what allocation we get from the issuer, we're able to distribute it to our customers. SpaceX obviously was a large one, but it's a platform that we were seeing more and more demand on.
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B
And did you see a lot of demand with SpaceX?
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Yeah, it was definitely one of big demand because of the size of the ipo.
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One of your biggest days.
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I couldn't tell you the size exactly, but I think what's interesting is seeing more and more of the demand from our retail customer for early access to this company. A lot of these companies are waiting longer and longer before going public and therefore the retail customer is not able to also get the same upside that they were when, you know, they were participating into the Google ipo, for example.
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C
What is the way, what is the way to access that in an environment where it's traditionally been restricted to these so called accredited investors which have, you know, specific barriers to net worth.
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D
That's, that's probably one of the things that we need to change here in the U.S. if you think about other places like in the EU, you have an assessment test that you have to complete. So it will ask you question and only if you pass this question you're able to access this type of product.
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Is it about net worth or is it about.
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It's about your knowledge and understanding the risk of the product. And I think that's a very big difference because no matter of your net worth, if you understand it, it should give you access, not necessarily just because you have a big bank account.
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B
John, we just have about 40, 50 seconds here. I mean you talked about people wanting different things on the platform as they kind of get older. Right. And different things that you guys are offering. What is the biggest demo though, demographic on the platform or how is it changing?
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D
Yeah, our demographics still skew on the, on the younger side in the 35 to 40. But we also have new products. For example, we launched the Trump account, which allows you to create an account for your babies and your child. And I think that's something that is very important because it's by starting to utilize this type of platform that you are able to start thinking about the future of your children.
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B
Are you seeing an uptick in that? Are you seeing activity around that?
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D
Yeah, absolutely. I don't have the exact number, but you will see that a lot of our customers wear opening accounts for their children. And I think it's important the children needs to learn about this to start thinking about their future.
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C
Can you open an account for my children, Carol?
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I will do anything.
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Thank you.
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Absolutely. By the way, Robinhood reporting second quarter results on July 29th.
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Johan Kerberot, senior Vice President, General Manager of Crypto and International at Robinhood. This is Bloomberg.
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The Big Take Podcast from Bloomberg News keeps you on top of the biggest stories of the day.
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My fellow Americans, this is Liberation Day.
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Stories that move markets.
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Chair Powell opened the door to this
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