Robinhood introduces a feature in its latest addition to the cryptocurrency space that gives merchants more control over digital tokens.
The new public brokerage will test "crypto wallets" with selected customers next month, the company announced in a blog post on Wednesday. The so-called wallet enables investors to trade, send and receive digital currencies and to store and retrieve them in the Robinhood app.
Robinhood's shares were up 10.9% on Wednesday.
Over the past few months, some users – Dogecoin traders in particular – have been complaining on social media that using Robinhood as a broker has left them exposed to crypto prices but not actually owning the coins themselves.
"We're not the first to hit the market – we've taken the time to make sure we're building this gradually," Robinhood's chief product officer Aparna Chennapragada told CNBC in a phone interview. "We'll have a couple of customers who iterate over the product, get customer feedback, and then expand from there."
Certain customers will start testing the product and Robinhood will share their feedback through its blog and Twitter, said Chennapragada, who spent 12 years at Google on leading product, development and design teams before joining Robinhood. Eventually, the rollout will allow customers to join on a waiting list.
Robinhood's growing crypto business
The start-up debuted in cryptocurrency trading three years ago, but it has become increasingly important to the company's top line. More than half of Robinhood's transaction-based revenue last quarter came from trading cryptocurrencies. That is only 3% more than a year earlier.
With the new wallets, customers can pool their digital coins in one account. Customers can then trade, send and receive cryptocurrencies to and from other wallet addresses. Rivals Coinbase and Gemini already offer this feature. Bloomberg News first reported on Robinhood's plan to introduce this feature in a beta version of the trading app.
Bitcoin and other cryptocurrencies have seen strong volatility since Bitcoin hit an all-time high in April amid further regulatory concerns.
Cryptocurrencies slumped along with the broader market on Monday, with Bitcoin ending the day about 7% lower. The slide sparked the debate about whether Bitcoin can or should serve as a safe haven. In recent years, Bitcoin has shown a stronger tendency to break in with the broader markets.
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Robinhood also said that a new feature that allows recurring crypto investments to be set up is live on the app. Customers can plan a commission-free crypto purchase for as little as $ 1.
The broker's move comes as cryptocurrencies are under scrutiny by the Securities and Exchange Commission, particularly Chairman Gary Gensler. Last week, Gensler assured lawmakers that Wall Street's top regulator is working to create a set of rules to oversee the volatile cryptocurrency markets while balancing the interests of American innovators.
"Currently we simply do not have enough investor protection in crypto financing, issuance, trading or lending," said Gensler in prepared remarks to the Senate's banking committee. "In all fairness, it's more like the Wild West or the old world of 'buyer beware' that existed before the securities laws were enacted right now."
Robinhood said the crypto wallets will have several security features, including identity verification, multi-factor authentication, and email and phone verification to keep coins safe from hackers.
“We are fully aligned with our regulators and the SEC to ensure that we are working on it with educational tools, protection with safety. This is great for customers, this is great for us, ”said Chennapragada.