Recently, due to the slowdown in cryptocurrency trading activities and regulatory pressure, Robinhood announced its acquisition of the global cryptocurrency exchange Bitstamp for $200 million to expand its international presence. At the same time, the cryptocurrency business has become a key driver of Robinhood’s performance growth, leading to a significant increase in its stock price this year.
Established in 2011, Bitstamp is considered one of the most compliant exchanges, operating in Luxembourg, the UK, Slovenia, Singapore, and the US. It is not only one of the four cryptocurrency companies approved by the UK’s FCA in the past year but also the first European cryptocurrency exchange to receive provisional approval in Singapore. Bitstamp has also been recognized as a preferred exchange by Ethereum founder Vitalik Buterin. Now, Bitstamp is set to become the cryptocurrency arm of the traditional securities trading software Robinhood.
Robinhood announced the acquisition of Bitstamp for $200 million on June 6, with the transaction expected to be completed in cash by the first half of 2025, subject to customary closing conditions and regulatory approvals. Barclays Capital will act as Robinhood’s exclusive financial advisor in this acquisition, while Galaxy Digital Partners will serve as Bitstamp’s exclusive financial advisor.
The strategic cooperation aims to enable Robinhood to expand beyond the US and bring reputable institutional business to the platform. Johann Kerbrat, the General Manager of Robinhood Crypto, expressed in an interview with Unchained that the acquisition of Bitstamp will help Robinhood tap into new markets, as the exchange is licensed and registered in over 50 countries and regions worldwide, serving customers in the EU, UK, US, and parts of Asia.
It is predicted that the acquisition will bring in 4 to 5 million new cryptocurrency customers for Robinhood. Additionally, Bernstein’s research report indicated that the acquisition will allow Robinhood to offer a wider range of cryptocurrency products to institutional clients, expanding from the current 15 tokens in the US and over 30 in Europe to Bitstamp’s 85 tokens, improving global liquidity and enhancing the platform’s economic efficiency.
The acquisition was also influenced by the regulatory environment in the US. In May, Robinhood received a Wells notice from the US SEC. Johann Kerbrat expressed disappointment in the SEC’s lack of regulatory clarity, which pushed Robinhood to focus on expanding into the EU market. The acquisition of Bitstamp is expected to strengthen Robinhood’s global influence and mitigate the SEC’s strict regulatory impact.
CoinGecko data shows that as of June 11, Bitstamp’s daily trading volume was close to $200 million, with a monthly visit count of 1.21 million, ranking 41st among various exchanges. Despite a previous ranking as one of the top three exchanges globally, Bitstamp’s market competitive advantage has lessened recently.
With the growth in assets and trading volume, Robinhood’s stock price has surged nearly 90% since the beginning of the year. JMP Securities raised Robinhood’s target price to $30, anticipating strong market performance. However, the acquisition of Bitstamp is not expected to bring substantial value to Robinhood, as Bitstamp’s profitability is minimal. Robinhood’s current stock price is $23.43, representing a 2.1% increase from the announcement of the acquisition, and an 89.3% increase since the beginning of the year. Robinhood also approved a $1 billion stock repurchase plan to be executed over the next two to three years starting in the third quarter of this year.
Overall, Robinhood is expanding its influence in the cryptocurrency field through various business initiatives, with the potential to attract more users and capital with the acquisition of Bitstamp.
