Everything You Need to Know About Robinhood's New Crypto Wallet

Everything You Need to Know About Robinhood's New Crypto Wallet

Robinhood is launching a crypto wallet in 2022. The wallet will feature security measures offered in partnership with Chainalysis, and you can sign up now.

Everything You Need to Know About Robinhood's New Crypto Wallet
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Published Jan 11, 2022Updated Jan 18, 2022

Crypto

Crypto

Technology

Technology

Active Investing

Active Investing

Popular stock trading app Robinhood branched into the world of crypto in 2018, allowing users to trade Bitcoin and Ethereum. Since then, the app has grown to support other popular crypto coins like Litecoin and Dogecoin, all under the promise that first popularized the app with stock traders: commission-free trades.

You can buy and sell crypto on the app, but does Robinhood have a crypto wallet? Not yet, but there's one on the way. Here's what you need to know about Robinhood's crypto wallet, what it will offer, and when it will be available.

Is Robinhood a crypto wallet?

Robinhood allows you to trade (buy and sell) cryptocurrencies much like a crypto exchange, but it doesn't allow you to keep them in a wallet. This means you can't send and receive crypto in and out of Robinhood. You can only convert your crypto into cash and then transfer the cash balance to your bank account.

In fact, this lack of a wallet means that when you buy crypto on Robinhood, you don't actually own the crypto you purchase. Unlike a crypto exchange like Coinbase, which lets you transfer your crypto out of the exchange and into your own crypto wallet or cold storage, you can't pull your crypto out of Robinhood. All you can do is convert it to cash and then withdraw that.

Of course, you still get to keep any gains you achieve in the form of fiat currency, so this might be good enough for casual day traders who are just trying to dip their toes into the world of crypto investing. For more advanced traders or long-term investors who want to buy and hold, though, Robinhood's lack of a wallet is likely a deal-breaker. Luckily, that feature is on its way.

coinbase
Coinbase

4.3

Crypto

Is Robinhood getting a crypto wallet?

Robinhood announced in September 2021 that a crypto wallet feature is headed your way soon—and the first customers have already started testing it. If you want to be one of the first to use Robinhood's new crypto wallet, you can join their waitlist. As of November 2021, there were already 1.6 million users on the Robinhood crypto wallet waitlist. The beta version is launching this month, and a full-blown version is set to launch sometime in 2022.

This crypto wallet will finally allow Robinhood users to move the crypto they purchase in and out of the app. You'll be able to send your crypto to an external wallet as well as transfer any cryptocurrencies you own into your Robinhood wallet as long as they're supported.

robinhood
Robinhood

4.3

Stock Trading

What security features will the Robinhood wallet have?

In terms of security features, the Robinhood wallet will include multi-factor authentication, identity verification, and phone and email verification. These measures can help prevent cyber attacks, and legal regulations surrounding cryptocurrency mean that pretty much all centralized exchanges require this type of KYC (know-your-customer) process. 

However, the identity verification components could turn away crypto enthusiasts, who often prefer to remain anonymous. There are still some DeFi wallets and exchanges that are non-KYC, and this would be preferable for traders who prioritize anonymity. For most investors, identity verification should help, not hinder, the security of their assets all while lowering the level of risk they take on.

What's more, at the end of 2021, Robinhood announced a partnership with Chainalysis that will help them offer increased security measures and compliance with legal regulations. Chainalysis is a blockchain analytics firm that advises both cryptocurrency businesses and government agencies on how to safely and securely increase their engagement with crypto. Implementing the platform's compliance solution, called "Know Your Transaction," and other best practices will help Robinhood offer a product that's built for a future with increasing regulations on crypto.

Robinhood pioneered low-cost, accessible stock trading with their simple user interface and commission-free trades, and now they're branching further into the crypto world with that same philosophy. While the introduction of a Robinhood crypto wallet might not be enough to win over hardcore DeFi enthusiasts, it will likely help them pave the way for a new wave of crypto investors to dig deeper into the world of decentralized finance.

True or False:

Just because a crypto exchange offers crypto wallets doesn't mean you have full ownership of your crypto.

True or False: