Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
Robinhood’s recent acquisition of Bitstamp for $200 million marks a significant expansion of its global footprint in the cryptocurrency market. Bitstamp, one of the oldest and most reputable crypto exchanges, brings a wealth of experience and infrastructure to Robinhood. Even more importantly, Bitstamp also holds over 50 active licences across key markets including Europe, the US, and Asia. This acquisition enhances Robinhood’s ability to serve both retail and institutional investors thanks to Bitstamp’s institutional services. The move will boost Robinhood’s capabilities and make it a formidable player in the international crypto space.
However, this acquisition also underscores a concern: the increasing centralisation of crypto trading power across exchanges. The European Securities and Markets Authority (ESMA) has highlighted that 90% of cryptocurrency trading volume is funnelled through a handful of exchanges. Binance alone controls nearly half the market. This concentration poses systemic risks. The failure or malfunction of a major exchange could have widespread repercussions for the global crypto ecosystem.
One of the other standout topics of this acquisition is the relatively low acquisition sum. Bitstamp is 1 year older than Coinbase. Coinbase is currently worth over $60 billion on public markets, while Robinhood was able to acquire Bitstamp for ‘only’ $200 million. Bitstamp never truly managed to reach Tier 1 exchange status. But the discrepancy still highlights the continuous importance and size of US markets versus Luxembourg-based and Europe-focused Bitstamp.
The acquisition must also be viewed in the light of the US Securities and Exchange Commission’s (SEC) ongoing case against Robinhood. Only a few weeks ago, Robinhood disclosed that the SEC had recommended an enforcement action against the company over its crypto business. Instead of taking a step back, Robinhood is doubling down on crypto. This is a clear sign of the SEC’s relative loss of deterrence against the crypto industry. The agency’s many legal and legislative setbacks of the past weeks and months have not gone unnoticed.
The views and opinions expressed in this article are those of the authors and do not represent those of City AM, its affiliates, or employees.