Bucking the momentum in the crypto industry, Robinhood’s digital assets trading revenue dropped 36% in the second quarter, the online brokerage said Wednesday.
The fintech company reported $160 million in crypto revenue, a significant drop from the $252 million recorded in the previous quarter.
The performance was a blemish on an otherwise a strong second quarter for the fintech company, with its net revenue rising 6.5%, to $989 million.
Robinhood’s crypto results appeared to stem from the market’s struggles in the early part of the quarter and muted retail investor engagement.
Even as crypto prices rebounded to hit all-time highs in the second quarter, Robinhood’s trading volume fell 39%, to $28 billion, from the first quarter.
In June, the company bet on the growth of tokenisation even though CEO Vlad Tenev has said Robinhood planned to diversify its revenue streams beyond crypto.
‘Biggest innovation’
The numbers show less reliance on crypto as the earnings from cryptocurrency trading accounted for 16% of its total net revenue, down from 25% in the first quarter.
Tenev called tokenisation the “biggest innovation” in the industry in the past decade. Robinhood’s tokenisation push enables users in Europe to trade tokenised versions of US stocks.
Crypto market maker Wintermute said tokenisation could be the next major driver of onchain adoption and that Robinhood has positioned itself to capitalise on the market shift.
But it’s a market that is already brimming with competition from the likes of Backed Finance, which offers a similar product called xStocks that can be traded on Kraken and decentralised exchanges on Solana.
Other crypto incumbents like Coinbase and DeFi protocol Ondo Finance are also pushing to obtain the required regulatory clearance to launch their own tokenised assets service.
It’s part of a broader trend of crypto-native establishments moving in the opposite direction of the fintech creep into cryptocurrencies.
Massive slump
For Robinhood, the successive quarterly crypto earnings misses could mean its position in the retail trading market for cryptocurrencies is fraying.
Yet, Robinhood’s crypto revenues are up 98% year-on-year, and its total revenue was up 45% in the same period.
Jason Warnick, CFO at Robinhood, remained bullish, saying that the third quarter of the year was “off to a great start” and that customers have “accelerated their net deposits to around $6 billion and leaned in with strong trading across categories.”
