Robinhood is set to launch a new user-controlled non-custodial Ethereum wallet that gives users full control over their crypto assets by the end of the year.
This is a pivot from its web-based custodial wallet, where the company holds customer funds but the funds are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government entity. Custodial wallets also open customer funds to exchange-related hacks, meaning the funds could be forfeited if an exchange went bankrupt, as outlined in Coinbase’s second-quarter earnings report.
“At Robinhood, we believe that crypto is more than just an asset class,” said Vlad Tenev, co-founder and CEO of Robinhood in the press release. “Our web3 wallet will make it easier for everyone to hold their own keys and experience all the opportunities that the open financial system has to offer.”
According to the company, the new wallet will also ensure there are “guard rails” for new users who are more at risk of losing their funds for not storing their private keys properly, and will let users “trade and swap crypto with no network fees.”
“We talked to a lot of people [who said] ‘you start with a certain amount of money and once you get the NFT or asset you want, you have 50% less money because of transaction fees,” said Johann Kerbrat, Robinhood’s CTO. “A lot of people are staying outside of Web3 because of the cost,” he said. [But] Web3 is here to stay and we’re building for the long-term. It’s a bet on the future.”
It is unclear how Robinhood aims to achieve the no-fee model on the Ethereum blockchain, where users typically pay significant gas fees to process a transaction. According to Kerbrat, Robinhood’s solution will entail “partnering with liquidity partners to get the best price.”
Robinhood says it plans to roll out the beta versions of the wallet over the summer, with the intention of making them widely available by the end of the year.
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