Robinhood (HOOD), in an effort to continue delving deep into the crypto industry, announced it is taking a minority stake in crypto exchange Crypto.com. The brokerage will soon add yes-or-no contracts from Crypto.com prediction business and take stake in digital-currency exchange, according to a Tuesday press release.
The two companies have been discussing ways to expand Robinhood’s prediction-markets offerings, The Wall Street Journal reported in July, and reached a multiyear accord to include event contracts backed by Crypto.com’s OG.com business on the brokerage’s app. Terms of the agreements, including Robinhood’s investments, weren’t disclosed. Crypto.com and OG were valued at $15 billion and $5 billion, respectively, after Citadel Securities bought a stake in each in July.
“We think this is the beginning of a very strategic relationship, and the prediction-market event contracts are just the first product we’re going to be launching together,” Crypto.com Chief Executive Kris Marszalek said in an interview. The two companies have also discussed equity-linked perpetual futures should regulators approve the product, he said.
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JB Mackenzie, Robinhood’s vice president and general manager of futures and prediction markets, also said today the partnership would allow the brokerage to offer better pricing and a wider variety of contracts. It also means the trading platform will be firing on all cylinders, he said, as a crucial stretch for the event-contracts business begins: the start of football season, followed by the midterm elections later this fall. “It’s something [our customers] want to trade,” Mackenzie said. The Crypto.com deal “allows us to continue to have more skin in the game.”
Sharss in Robinhood (HOOD) stock were little moved on Tuesday following the announcement. In the past month, however, HOOD is up over 28%, reflecting positive growth.