London Daily

Focus on the big picture.
Thursday, Aug 28, 2025

Crypto-Friendly Robinhood May Have to Look For A New Main Revenue Stream

Crypto-Friendly Robinhood May Have to Look For A New Main Revenue Stream

According to SEC Chairman Gary Gensler, SEC could ban payment for order flow, which is the leading revenue stream for a popular trading app Robinhood.

Robinhood executives have promised to diversify its revenue sources in the coming months and expand its appeal to cryptocurrency users.

U.S. Securities and Exchange Commission Chairman Gary Gensler said in an interview with Barron’s that his agency is considering banning “payment for order flow” practice. Trading in HOOD shares subsequently dropped, as payment for order flow has traditionally been brought in a large chunk of their revenue.

Payment for order flow (PFOF) is the compensation and benefit a brokerage firm receives for directing orders to different parties for trade execution. The brokerage firm receives a small payment, usually fractions of a penny per share, as compensation for directing the order to a particular market maker.

In other words, when someone buys a stock on Robinhood, another company pays Robinhood fractions of a penny per share to match buyers and sellers. Using complex price data, these market makers can execute the trade more efficiently than Robinhood could and take a cut of the resultant proceeds.

This practice enables Robinhood to advertise commission-free trades. And it’s not necessarily a bad thing. The market makers provide liquidity that make reasonably priced trades possible. They can even improve the trading prices for Robinhood customers as they must be able to at least match, if not beat, orders placed directly on a U.S. stock exchange, in line with what’s called National Best Bid and Offer (NBBO).

Gensler has in the past been critical of the PFOF practice, whereby wholesale market makers pay broker-dealers to send them client orders that they execute on their own trading platform or a third-party platform. He has said the practice raises several conflict-of-interest questions.

According to some opinions, the data that market makers receive will reduce competition over time as the best firms price other market makers out, leading to larger spreads. Gensler agrees that it might be better if this data were all public.

“They get the data, they get the first look, they get to match off buyers and sellers out of that order flow. That may not be the most efficient markets for the 2020s.”

Robinhood CEO Vlad Tenev, in the company’s Q2 earnings announcement, remained committed to a number of new product additions, including a crypto wallet and more cryptocurrencies for trading. Its seven listed coins, including Dogecoin, are a primary source of non-PFOF revenue for the firm.

In the Q2 earnings call Robinhood revealed that 60% of accounts with funds in them had begun trading crypto for the first time, enough for crypto revenue to account for 41% of total revenue—up from 17% the previous quarter. Of that, however, 62% came solely from Dogecoin.

Source: Crypto-Friendly Robinhood May Have to Look For A New Main Revenue Stream – Fintechs.fi

Newsletter

Related Articles

0:00
0:00
Close
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Argentine President Javier Milei Evacuated After Stones Thrown During Campaign Event
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Starmer Should Back Away from ECHR, Says Jack Straw
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
Chinese AI Chipmaker Cambricon Posts Record Profit as Beijing Pushes Pivot from Nvidia
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Welcome to The Definition of Insanity: Germany Edition
Just a reminder, this is Michael Jackson's daughter, Paris.
Spotify’s Strange Move: The Feature Nobody Asked For – Returns
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
A new faith called Robotheism claims artificial intelligence isn’t just smart but actually God itself
Deputy Prime Minister Angela Rayner Purchases Third Property Amid Housing Tax Reforms Debate
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Italian Facebook Group Sharing Intimate Images Without Consent Shut Down Amid Police Investigation
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
Sam Nicoresti becomes first transgender comedian to win Edinburgh Comedy Award
Builders uncover historic human remains in Lancashire house renovation
Australia Wants to Tax Your Empty Bedrooms
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
FBI Investigates John Bolton Over Classified Documents in High-Profile Raids
Report reveals OpenAI pitched national ChatGPT Plus subscription to UK ministers
Labour set to freeze income tax thresholds in long-term 'stealth' tax raid
Coca‑Cola explores sale of Costa coffee chain
Trial hears dog walker was chased and fatally stabbed by trio
Restaurateur resigns from government hospitality council over tax criticism
Spanish City funfair shut after serious ride injury
Suspected arson at Ilford restaurant leaves three in critical condition
Tottenham beat Manchester City to go top of Premier League
Bank holiday heatwave to hit 30°C before remnants of Hurricane Erin arrive
UK to deploy immigration advisers to West Africa to block fake visas
×