Robinhood embraces the trading of copies after warning competitors of regulatory risks

What difference makes a changing regulatory environment.

About nine months after suggesting that a young copy trading platform could only work because it stole “under the radar” of regulators, Robinhood announced its own entry into space with “Robinhood Social”, a new feature that will allow users to follow and manually reproduce the transactions of prominent investors.

This decision represents a strike about the house for the online brokerage house, which has always been cautious about the features that could attract a regulatory examination. The company celebrated its function of festive digital confetti before its IPO in 2021 after the regulators raised concerns about the gamification trade, which has embraced copy trading, another potentially gamified functionality, all the more notable.

This distrust was fully exposed in December, during a conversation with this publisher about the trading platform for Dub copies, the CEO of Robinhood Vlad Tenev suggested that such platforms could work mainly because of their smaller size, proposing that the “copy trading could become more interesting for regulators” and that the dub could not yet be under the ” of copy “due to its” comparative size “.

Now Robinhood bets that the regulatory landscape has changed sufficiently to enter the trading market of copies.

The timing is particularly notable given the pointed criticism that Robinhood was confronted earlier this year with the 23-year-old Dub founder, Steven Wang, who positioned his platform as an alternative more focused on education for traditional trading applications.

“I have a lot of respect for what [CEO] Vlad [Tenev] did to make trading free, “Wang told me in February.” But ultimately, which facilitates trade without guidance of experts, without education, is really to play for the wider population. »»

Wang has constantly argued that DUB’s approach – which includes risk scores, risk adjusted yields and portfolio stability measures – represents a safer alternative to platforms like Robinhood. In his conversation with Techcrunch, Wang also criticized Robinhood’s decision to offer pieces even like Trump, saying that incentives are “poorly aligned between these large platforms which are now public companies that must earn money”.

The news of Tuesday, announced at the event of the company of Robinhood earlier during the day, spoke of the possibility that Robinhood has, in fact, acquired a four -year dub, which officially launched last year and so far raised $ 47 million in investor funding. But contacted comments, a spokesperson for Robinhood replied by email: “No, this is not an acquisition, we build our own platform in Robinhood.” A request for comments from Wang was not returned at the time of the press.

The version of Robinhood by Copy Trading differs significantly from platforms like Dub and established players like Etoro, which offered the trading of copies with American users for years via its Copytrader function. Although Etoro authorizes the automatic copy of portfolios from other real -time traders (with American users limited to copying only of other American merchants due to the regulations), DUB allows users to automatically copy whole portfolios for a monthly subscription of $ 10, and Robinhood Social will require that users will reproduce manually, a distinction that can help meet concerns regulations.

The platform, which should be launched at the start of next year, will showcase verified merchants and display the activities of famous investors and members of the congress. Unlike the informal copy trading that occurs on social networks, Robinhood will require identity verification and proof of actual portfolio positions. The plan, according to the company, is to first invite 10,000 social users from Robinhood to test the service before deploying it more widely.

The launch comes at a time when the regulatory landscape is evolving quickly. Cryptographic companies have been strongly examined under the Biden administration, while many cryptographic companies have become listed companies in recent months, their path released by the friendly position of the Trump administration. Meanwhile, the trading of copies – long common in Europe but strongly restricted in the United States – can ultimately be accepted.

Given through this objective, Robinhood’s entry into copy trading represents more than just launch of functionality; It could point out the opening of Vannes for a wave of new platforms. If Robinhood can successfully negotiate the legal landscape which has long limited the trading of copies in the United States, other fintech outfits seem to be likely to follow. Etoro’s successful IPTR of May’s May, which raised $ 310 million and saw stocks increase by 29% during their beginnings, has already demonstrated a strong investor appetite for copy trading platforms.

Whether this potential wave is good or bad news for retail investors – or will mainly be used to stimulate Fintech assessments – is an open question. For the moment, Robinhood shareholders are probably the clearest winners.