Robinhood buys crypto exchange Bitstamp in surprise $200 million deal

Bitstamp has been a fixture of the crypto industry since 2011 when it launched in Slovenia, and then relocated to Luxembourg and the U.K. Its marketshare has declined in recent years, however, and despite having four to five million customers, Bitstamp now ranks 16th in trading volume among cryptocurrency exchanges. Its biggest market remains Europe, but it also has customers in the UK, Asia and the U.S.

In an interview with Fortune, Robinhood Crypto’s General Manager, Johann Kerbrat, pointed out that Bitstamp has 50 active licenses across the globe, and that the exchange also does a robust trade with institutions. He added that the deal will be a significant first step towards another of Robinhood’s strategic priorities, which is developing an institutional business to complement its fast-growing suite of consumer products.

The acquisition comes as a surprise since there had been no reports Bitstamp was up for sale, and as Robinhood is bouncing back from a brutal 2023 that saw the price of its shares, which are currently trading around $22, fall as low as $7. The downturn, which led to rumors that Robinhood had become an acquisition target, was part of a broader reckoning that cast doubt on the overall health of the fin-tech sector.

In 2024, the story has been much different for Robinhood as the company posted record earnings for Q1, and last week announced a $1 billion stock buyback. Meanwhile, it has begun to move away from the feast-or-famine business of stock trading, adding services like credit cards and retirement accounts that are less prone to market fluctuations.

Robinhood’s acquisition of Bitstamp coincides with a huge upswing in the crypto markets that has seen the price of Bitcoin climb over 60% since the start of the year, and the company post a three-fold increase in crypto revenue during the first quarter.

The deal also has the potential to transform Robinhood’s current crypto operations, which primarily revolve around sourcing Bitcoin and other currencies from market makers. In acquiring Bitstamp, Robinhood will be able to source crypto from its own exchange instead, and potentially invite its customers to trade there. Bitstamp also offers as many as 85 digital tokens in some of its markets, compared to the dozen or so offered by Robinhood, as well as lending and staking services.

Any attempt by Robinhood to increase its crypto offerings in the U.S. could face scrutiny from the Securities and Exchange Commission, which signaled in May that it plans to sue the company over its token offerings. The move by the SEC came as part of a broader assault on the crypto industry, but one that may be on shaky legal ground as both courts and elected officials have accused the agency of overreach.

As for whether Bitstamp will remain as a stand-alone brand, or be renamed as a Robinhood product, Kerbrat said it is premature to say since the deal will only be closing next year.

The acquisition comes nearly a year after reports that Bitstamp was in talks to raise funds to expand its operations in the U.K. and Asia. At the time, the company’s CEO Jean-Baptiste Graftieaux said the company was not looking to sell itself.

In the Robinhood press release announcing the acquisition, Gratfieaux stated: “Bringing Bitstamp’s platform and expertise into Robinhood’s ecosystem will give users an enhanced trading experience with a continuing commitment to compliance, security, and customer-centricity.”

Barclays Capital served as the financial advisor to Robinhood for the deal, while Galaxy Digital Partners served as advisor to Bitstamp.