Robinhood’s Bitstamp acquisition could open the door for institutional clients

Robinhood announced on Thursday that it entered into an agreement to acquire Bitstamp.

As part of the deal, Robinhood would pay $200 million in cash and it gets the bonus of an international expansion. The deal won’t close until the first half of 2025.

There are two aspects to look at when combing through this deal and what it means for the publicly traded Robinhood.

While the announcement buoyed shares, which jumped on the news, analysts such as JMP’s Devin Ryan didn’t boost their price targets or weighting on the stock.

Ryan’s team reiterated a $30 price target and its outperform rating on the stock.

“We believe owning the exchange will provide opportunities for the firm to more deeply connect into the ecosystem (e.g., trading, staking, tokenization, payments, remittance, wallet integration), and perhaps over the longer term play an even bigger role in the tokenization of assets and securities, which we believe could be quite interesting. We also see opportunities to drive more activity and better economics with existing Robinhood retail customers through the exchange,” the analysts wrote.

Robinhood rolled out Solana staking in the EU earlier this year after making its European Union debut just last December. In February, the firm teased that it plans to focus on building out that customer base.

But Ryan’s team thinks that HOOD could open its doors to more institutional clients with the acquisition as well. According to CoinMarketCap, Bitstamp is ranked 16th on top crypto spot exchanges.

The company said it plans to onboard the Bitstamp team, and this means that it won’t have to pursue its own licenses in various jurisdictions.

“Through this strategic combination, we are better positioned to expand our footprint outside of the US and welcome institutional customers to Robinhood,” said Johann Kerbrat, General Manager of Robinhood Crypto.

But it’s going to take some time for these benefits to be realized financially. JMP wrote that it estimates revenues to be in the “ballpark of $100 [million]” and that’s based on “trailing 12-month volumes of $70 billion.”

Now there are other concerns, which we covered in the Empire newsletter Thursday morning.

First is the potential lawsuit that Robinhood faces on US soil.

In the last couple of months, the Securities and Exchange Commission served Robinhood, Uniswap and Consensys with Wells notices. Based on the Coinbase timeline from last year, if the SEC pursues a lawsuit against any of the three, we’re likely to see it filed this summer.

Despite trying to fly under the radar, Robinhood couldn’t avoid the SEC’s ire. Last year, the company even delisted tokens after the regulatory agency listed them as securities in suits against Binance and Coinbase.

Get the news in your inbox. Explore Blockworks newsletters:

The Breakdown: Decoding crypto and the markets. Daily.
Empire: Crypto news and analysis to start your day.
Forward Guidance: The intersection of crypto, macro and policy.
0xResearch: Alpha directly in your inbox.
Lightspeed: All things Solana.
The Drop: Apps, games, memes and more.
Supply Shock: Bitcoin, bitcoin, bitcoin.