Robinhood onboards Chainalysis in preparation for crypto wallet launch

Quick Take

  • Robinhood is preparing to beta test its crypto wallets starting in January. 
  • In advance of the rollout, the trading platform has onboarded blockchain analytics firm Chainalysis’ tools.
  • Currently, Robinhood is a leading way for retail investors to get exposure to crypto’s price movements, but users cannot deposit or withdraw crypto from the app — and now the firm is working to change that. 

In preparation for its crypto wallet rollout, Robinhood is integrating analytics tools from leading crypto intelligence firm Chainalysis, according to an announcement shared with The Block.

Currently, Robinhood offers users exposure to the price movements of various cryptocurrencies on its brokerage app, which also offers more traditional stock trading. However, users cannot withdraw or deposit crypto off-platform. 

In September, Robinhood announced plans to change this and allow users to move tokens as they would be able to on a crypto exchange like Coinbase or Kraken. That is primarily a regulatory challenge, as the expectations for such a widely used platform to protect against money laundering are quite high. 

“The executive team has spent significant resources and capital to embed that principle into every level of the organization," Ben Einstein, Robinhood Crypto's head of partnerships, said in a statement. "Chainalysis works closely with regulators and law enforcement to develop industry best practices and that approach is aligned with Robinhood’s commitment to working with policymakers in a collaborative manner.”

Specifically, Robinhood will be using Chainalysis KYT and Chainalysis Reactor. The former flags risky transactions in real time, noting wallet addresses that have previously been associated with illicit activity. The latter visualizes chains of transactions, which is handy for due diligence checks. 

It was only on December 9 that Robinhood Crypto announced the conclusion of the alpha program for its crypto wallets. Starting in January, it will be onboarding users to beta testing, for which the firm says that 1.6 million users are on a waitlist. 

Despite interest in its coming crypto wallets, Robinhood has faced a rough time in the markets. Shares in HOOD priced at $34 upon its initial public offering in July, promptly peaking at $80. As of the end of trading on Friday, December 10, its shares had slipped below $22. 

Source: NASDAQ

Chainalysis is one of the oldest firms working on blockchain analytics and is in many ways the go-to contractor for government agencies in the US looking to investigate cryptocurrency transactions.

As that has become a larger mission over time and especially since the surge in high-profile ransomware attacks at the beginning of this year, analytics firms have seen a surge in funding. Chainalysis, in particular, has benefitted, closing a funding round this summer that valued the firm at over $4 billion

Alongside the rash of fundraises at more established blockchain investigators, a number of new players have entered into the market. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Trending Stories

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

Will Sanctions Drive Russia into the Arms of Cryptocurrencies?

From the removal of many Russian banks from SWIFT to a seemingly constant flow of new sanctions, Russia’s invasion of Ukraine has left many to wonder: Is the country likely to lurch towards cryptocurrencies? And if so, what does this mean for businesses that are holding and/or using crypto? Crypto and sanctions evasion Although crypto […]
Read Full Story
Sponsored Post

Layer-2 Scaling Solutions: A Framework for Comparison - Commissioned by Polygon

Ethereum had a breakout year in 2021. It’s native asset, ETH’s, market capitalization surpassed $500 billion for the first time. Its network facilitated upwards of $7 trillion value transfer. Non-fungible tokens (NFTs) emerged as another “killer application” that have put its technology on the global stage and caught the attention of the masses.
Read Full Story
May 5, 2022, 3:17PM UTC