Revolut plans to rival Robinhood’s crypto exchange by avoiding the same traps

It’s been a whirlwind 12 months for the world of cryptocurrency trading platforms. Robinhood’s well-publicized market debut led to a year of almost relentless decline as wider crypto markets reeled, whilst fresh challenger banks like Revolut sought to grow into the industry. Today, Revolut’s open banking platform not only looks like a fitting challenger to Robinhood, the European firm looks set to learn from its US rival’s mistakes by offering more comprehensive crypto options. 

Revolut’s ambitions for the world of crypto are big. In late 2021, the fintech ran job ads on LinkedIn requesting applicants who "will be leading a technical team to architect and build Revolut Crypto exchange".

The platform was requesting candidates with over seven years industry experience in building order matching engines to help the company to grow into cryptocurrency investing. 

In 2021, Revolut underwent a huge $800 million funding round which left the company with a $33 billion valuation. Today, it’s becoming clearer that this added windfall will be invested in fresh cryptocurrency solutions for customers - among other innovative products. 

Revolut CEO, Nikolay Storonsky, has unveiled his strategy to turn Revolut into what he terms a ‘superapp’, and the platform’s recent launch in five new countries, Sri Lanka, Chile, Ecuador, Azerbaijan and Oman, has helped to bolster the challenger bank’s global outlook. 

Despite clear signs of growth, Revolut’s decision makers will do well to heed the lessons to be learned from Robinhood when it comes to accommodating crypto solutions into its offering. Whilst Robinhood also boasted a valuation close to Revolut at $32 billion following its IPO in July, the investment platform’s current market capitalization stands at $7 billion following a difficult first year on Wall Street. 

One of the biggest issues that burdened Robinhood was the platform’s dependence on high cryptocurrency trading - and specifically, the performance of meme-coin, Dogecoin. 

Revolut will undoubtedly be using Robinhood’s performance as a cautionary tale as the fintech looks to increase its suite of crypto services around the world. 

Revolut’s big plans for crypto

In one of Revolut’s most ambitious plans, the company has reportedly been looking into launching its own crypto token. 

Speaking to CoinDesk, one source said: “It’s a ‘Revolut users earn a token’ type of thing, similar to Wirex and Nexo,” referring to the WXT token created by Wirex and the NEXO token. 

This would indicate that Revolut’s token would behave in a similar way to Binance’s BNB token, rather than being produced as a stablecoin that maintains a consistent value. 

Financial news platform, AltFi, opted to compare Revolut’s cryptocurrency token to that of the UK’s Tesco Clubcard, which is a supermarket loyalty scheme that has worked to retain customers for 30 years. 

With a customer base of 15 million, Revolut may ultimately boast similar user figures to the Tesco Clubcard, which is actively used by around 20 million shoppers. The scheme could grow to become a central part of Revolut’s ambitions to evolve into a ‘superapp’. 

It’s also been noted that the growth of Revolut has been so rapid, that the company is launching new and ambitious features at a faster rate than its rivals. At present, with around 75 in-app features focused on insurance, stocks, and crypto options, the challenger bank possesses around five-times more features than that of institutional competitor, Santander -  according to Optima data. 

Whilst any future Revolut token launch would be subject to approval from the UK’s Financial Conduct Authority (FCA), the United Kingdom has recently doubled over its efforts to accommodate crypto as a strategy to foster innovation. In fact, the world’s third largest cryptocurrency based on market cap, Tether, has recently confirmed that it’s set to launch its own stablecoin pegged to the British Pound, as a means of helping businesses to adopt crypto in a familiar currency. 

These movements to grow into the crypto landscape by the UK government is likely to accelerate Revolut’s rate of growth further through the lowering of key regulatory hurdles for new products and services. 

Robinhood’s stock continues to fall one year after debut

At this stage it’s worth remembering Robinhood. The company’s stock debuted on the Nasdaq under the ticker symbol HOOD in July 2021, and it was Robinhood’s strong crypto ambitions that conspired to see the stock consistently tumble over the past year. 

As the data above shows, HOOD is currently some 77% adrift from its debut value. At a market cap of around $7 billion, Robinhood has fallen behind many of the United States’ most popular alternative exchanges in terms of value. 

One of the major issues Robinhood faced amidst its prolonged downturn was the lack of a contingency plan should the cryptocurrency market enter a period of sustained decline. 

According to CNBC, Robinhood confirmed that the meme-based altcoin, Dogecoin, accounted for 62% of the platform’s cryptocurrency revenue in a blistering Q2 for the company. This gamble on DOGE appeared to be paying off at the time of the trading platform going public - with the company’s revenue from crypto transactions climbing from $5 million in Q2 2020 to $233 million in Q2 2021. 

(Image: CoinGecko)

However, as Dogecoin’s performance since the beginning of 2021 shows, the cryptocurrency never built on the momentum that the asset generated in Q2 2021, and trading volumes evaporated.

Whilst the plight of Robinhood serves as a stark warning to Revolut’s bold crypto ambitions, it also offers a valuable lesson in avoiding placing eggs in one basket - regardless of the optimism that surrounds a single asset or wider market. 

In exploring the prospect of releasing its own cryptocurrency, Revolut may be heeding the lessons to be learned from Robinhood by avoiding the same traps. For a fintech that’s intent on building its own superapp, Revolut’s navigation of the unpredictable crypto market will be a make or break frontier for the leading finance unicorn.