Blockchain and Crypto, Member Exclusive

With traditional banks acting as custodians, is crypto’s decentralized nature under threat?

  • Over $200 billion worth of bitcoins have been lost so far. Do people need a better way to secure their digital assets?
  • “Not your keys, not your coins,” say crypto traditionalists, arguing the space is meant to be free of banks, with a fundamental ‘one’s own bank’ philosophy.
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With traditional banks acting as custodians, is crypto’s decentralized nature under threat?

As the world of cryptocurrencies is booming, everyone wants a piece for themselves. American brick-and-mortar banks are increasingly looking to offer crypto custodial accounts. While this may be seen as an encouraging development, it forces one to reflect on whether such institutional involvement contradicts the basic thesis of cryptocurrencies — with banks acting as custodians, is crypto’s decentralization under threat?

US Bank is the latest to offer crypto custodial accounts. The bank’s offering enables fund managers to store private keys for Bitcoin, Bitcoin Cash, and Litecoin, with assistance from sub-custodian NYDIG. The bank finds the asset class to be of increasing interest to its customers and believes it will continue to gain relevance in the future. 

Profile

Robinhood is an online stock brokerage that offers its customers commission free trading and investing. Robinhood users can invest and trade in stocks, exchange traded funds, options, and cryptocurrency. Customers can invest in over 5,000 stocks with Robinhood, including most U.S. equities and ETFs listed on U.S. exchanges.

Robinhood Financial, LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. All cryptocurrency holdings are held in Robinhood Crypto as opposed to Robinhood Financial.

The company was founded in 2013 by Stanford roommates Baiju Bhatt and Vladimir Tenev. It has its headquarters in Menlo Park California and offices in the U.S and the UK.

Account Types

Robinhood’s products are accessible through its three different accounts: Robinhood Instant, Robinhood Gold and Robinhood Cash.

Robinhood Instant

Robinhood Instant is the default Robinhood account which is a margin account that has access to extended hours trading and instant deposits. Robinhood Instant account users do not have to wait for funds to process while selling stocks or depositing up to $1000.

Robinhood Gold

Robinhood Gold comprises a range of investing tools and premium products such as greater instant deposits starting at $5000 to a max of $50k, research from Morningstar on 1700 stocks, Level II Market Data from Nasdaq and more access to trading on margin. It has greater buying power and larger instant deposits as compared to the Robinhood Instant account.


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