I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See all posts Frank GogolAll of Robinhood’s Crypto Fees Explained
Updated on January 7, 2024
Written by
Written by
Reviewed by
Rohit Mittal
Reviewed by
Rohit Mittal
Rohit Mittal is the co-founder and CEO of Stilt. Rohit has extensive experience in credit risk analytics and data science. He spent years building credit risk and fraud models for top U.S. banks. In his current role, he defines the overall business strategy, leads debt and capital fundraising efforts, leads product development, and leads other customer-related aspects for the company. Stilt is backed by Y Combinator and has raised a total of $275M in debt and equity funding to date.
See all posts Rohit MittalAt a Glance
- Robinhood offers commission-free crypto trading.
- Profits earned through “payment of order flow” by taking a share of market makers’ profits.
- Supported cryptocurrencies include Bitcoin, Ethereum, Litecoin, and more.
- Reasons for inability to buy crypto may include insufficient buying power, frozen accounts, or local law restrictions.
The world seems to be taken over by cryptocurrencies. More and more people are starting to realize banks are not what they talk up to be and deciding to invest the money instead elsewhere other than banks. With the mind-blowing returns from cryptocurrencies, many people are even ditching the stock market for the crypto market.
In a world where everyone is looking to dig for gold, the one who sells shovels can make a fortune. With this exact logic, many cryptocurrency exchanges have come up to allow people to buy and trade in cryptocurrencies as they please. These exchanges don’t do it for free though, there is always a catch! Let’s look a bit deeper into one of the most successful cryptocurrency exchanges – Robinhood.
Does Robinhood Charge Fees For Crypto Trading?
There are several cryptocurrency exchanges today. Each with a different business model than the other, and each is in tough competition with one other. No matter how many cryptocurrency exchanges there might be, none could ever beat Robinhood in terms of commission fees, not even Webull. That’s because Robinhood effectively charges you a 0% commission on all your buy and sell orders on its platform. While several other exchanges charge up to 4% of your investment amount, Robinhood charges 0.
This is made possible by a method called “payment of order flow.” Essentially Robinhood earns its profits by taking a share of the profits from the big market makers who are incentivized to give them this share for proving the business to them through Robinhood. It is a way to protect the money from small retail investors and ensure that large investors can make their trades in a timely fashion.
Although there are critics that say this mode of business is wrong and causes a conflict of interest, Robinhood proudly claims it provides better prices and allows commission-free trading, which essentially protects the interests of small-scale retail investors who are more in number over the large-scale institutional buyers that are less and have greater flexibility.
Which Cryptocurrencies Can You Buy On Robinhood?
This is a question a lot of people have. Of course, they would be right to ask because there are just too many cryptocurrencies around that you cannot follow. There are some cryptos that the platform supports buying, selling, and giving real-time market data, and there are other crypto coins that the platform only supports real-time market data and not buying or selling. The following is the list of cryptocurrencies that can be purchased and/or sold on the Robinhood trading platform.
The cryptocurrencies that are supported on Robinhood to buy, sell and have real-time market data are:
- Bitcoin (BTC)
- Bitcoin cash (BCH)
- Bitcoin SV (BSV)
- Dogecoin (DOGE)
- Ethereum (ETH)
- Ethereum Classic (ETC) and
- Litecoin (LTC)
The cryptocurrencies that are only supported for real time market data and not to buy or sell are:
- Bitcoin Gold (BTG)
- Lisk (LSK)
- Monero (XMR)
- Neo (NEO)
- OmniseGo (OMG)
- Qtrum (QTUM)
- Ripple (XRP)
- Stellar (XLM)
- Zcash (ZEC)
Beyond these, Robinhood crypto is constantly on the lookout to add any other cryptocurrencies it can in the future. One should also be wary that just because the company allows for real-time market data on certain cryptocurrencies does not mean that they plan to add them to the list of coins you can buy or sell any time shortly. Also, Robinhood does not plan on supporting ICOs at the moment.
Why Can Commission Free Trading Be Good?
Almost every exchange broker out there charges a certain commission on your assets, whether you buy them or sell them. The only way to escape this is to hold them in your portfolio for as long as you can. However, cryptocurrency exchanges are different from stock market exchanges. For one thing, they are not regulated by any governing body under most of the laws related to money. The stock market is under strict regulation by regulatory bodies in any country. How the crypto market is yet to see this kind of regulation.
This works as an added advantage to Robinhood since the rules are more relaxed and in favor of against. Robinhood’s business model relies on giving the maximum profit to both buyers and sellers since it takes a share of these profits instead of charging a commission. If a seller feels like a price is too low, they won’t sell; and if the buyer is looking at too high prices, they will hold off on buying.
Thus, Robinhood needs to manage the price variation perfectly for both its buyers and sellers regarding cryptocurrency trading. Its revenue depends on how much profit large-scale sellers make since it takes a share of that profit for providing them the best possible business from the small-scale retail investors.
Reasons Why Robinhood Won’t Let You Buy Crypto
While Robinhood seems to be an excellent place for you to buy and sell crypto, there are times when you might not be able to buy crypto on the trading platform. The following are the most probable reasons people find themselves unable to purchase cryptocurrency on the Robinhood trading platform:
Your Buying Power To Buy Crypto Coins Is Insufficient
Crypto trades do not work on margin. You need to deposit your sum beforehand into the brokerage balance to execute your trades. For example, if you wish to buy $2000 of Ethereum on Robinhood, you would first have to deposit $2000 into your account on the trading platform, without which you cannot execute your trades.
Your Account Got Frozen For Any Reason
There are many actions not allowed to be performed on your Robinhood account. If the company finds your account activity suspicious, they reserve the right to freeze your account without notice until your issue is resolved. Make sure you do not do anything against their terms of service to avoid such a situation in the future.
The Crypto Coin You Wish To Purchase Is Not Available In Your Area
While the idea of a cryptocurrency is to be decentralized and available to anyone in the general public, Robinhood does have to obey certain laws to run its “business” in any particular state or country. If local laws prohibit such activities, then the company can do nothing to resolve the issue.
Frequently Asked Questions (FAQ)
Does Robinhood charge fees for trading cryptocurrencies?
Robinhood advertises commission-free trading for cryptocurrencies. However, users should be aware of the spread, which is the difference between the buy and sell prices, as this can indirectly represent a cost.
Are there deposit and withdrawal fees for crypto on Robinhood?
As of the last update, Robinhood does not charge fees for depositing or withdrawing funds to and from your account. However, network fees for transferring cryptocurrencies to other wallets may still apply.
What is the spread fee on Robinhood for crypto trading?
The spread fee on Robinhood is the difference between the market price at which Robinhood purchases the cryptocurrency and the price at which it is sold to users. This spread can vary depending on market conditions.
Does Robinhood charge an inactivity fee for crypto accounts?
Robinhood does not charge an inactivity fee for its accounts, including those used for trading cryptocurrencies.
Are there fees for converting one cryptocurrency to another on Robinhood?
Robinhood currently does not offer the option to directly convert one cryptocurrency to another. Users would need to sell one asset and purchase another, incurring the spread each time.
Does Robinhood charge for real-time crypto market data?
Robinhood provides real-time market data for cryptocurrencies free of charge. Users do not have to pay extra to access this information on the platform.
What are the regulatory fees for crypto trading on Robinhood?
There are no explicit regulatory fees charged by Robinhood for cryptocurrency trading. However, users should be aware of general trading risks and the potential for regulatory changes in the crypto market.
Does Robinhood offer any premium services with additional crypto fees?
Robinhood offers Robinhood Gold, a premium subscription service, but its fees are not directly related to cryptocurrency trading. It primarily offers enhanced research tools and margin trading for stocks.
How does Robinhood’s crypto fee structure compare to other exchanges?
Robinhood’s main appeal is its commission-free model. While it does not charge direct fees like many other exchanges, the spread cost and the potential impact on buy/sell prices may still affect overall trading costs.
Can users face any hidden costs while trading crypto on Robinhood?
While not exactly hidden, the spread cost is a factor that can impact the cost of transactions. It’s important for users to understand how the spread can affect buying and selling prices on Robinhood.
Read More
- How to Make Money with Cryptocurrency
- How to Withdraw from Binance
- How to Transfer From Coinbase to Coinbase Pro
- How to Transfer from Coinbase to Binance
- How Does Cryptocurrency Gain Value?
- How to Read Crypto Charts
Final Thoughts
With the rise of trading done in cryptocurrencies, it would be a great idea to make Robinhood your go-to place to trade due to its zero commission policy and good margin fees as well. The platform supports all the great and popular cryptos and does a good enough job providing great customer service to all its customers.
There could be several reasons for you to face difficulty in buying crypto, and that’s entirely normal and easily solvable when you approach the company’s staff regarding your issue. Make sure you do create your free account and check out if Robinhood is the place for you.
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.