Does Robinhood Charge Fees for Trading Crypto?

The intersection of traditional finance and the burgeoning world of cryptocurrencies has given rise to platforms that provide easy access to both. Robinhood, a popular stock trading platform, is one such service that has extended its offering to include cryptocurrencies. But with this service expansion, a common question arises: "Does Robinhood charge fees for trading crypto?" In this blog post, we'll examine Robinhood's approach to cryptocurrency trading fees.

Robinhood has made a name for itself by offering commission-free trading for stocks and ETFs. In early 2018, it expanded its offerings to include cryptocurrencies. As of my last update in September 2021, users can buy, sell, and hold a range of cryptocurrencies including Bitcoin, Ethereum, Dogecoin, and more.

Robinhood continues its commitment to commission-free trading with cryptocurrencies. This means that users can buy and sell cryptocurrencies on the platform without directly paying a commission fee to Robinhood. This policy distinguishes Robinhood from many other cryptocurrency exchanges, which often charge a percentage fee per trade.

While Robinhood does not charge direct commissions on cryptocurrency trades, it's crucial to understand that this does not necessarily mean trading is entirely cost-free. Robinhood generates revenue from crypto trades through what’s known as a “spread.”

A spread is the difference between the market price of a cryptocurrency and the price at which it's offered on the platform. For example, if the current market price of Bitcoin is $35,000 but Robinhood offers it to users at $35,010, that $10 difference is considered the spread. Spreads allow Robinhood to facilitate trades without charging explicit fees, but they do represent an indirect cost to users.

As of my last update, Robinhood does not support transferring cryptocurrencies into or out of the app. This means if you purchase cryptocurrencies on Robinhood, you can't move them to an external wallet, and similarly, you can't deposit cryptocurrencies you own elsewhere into Robinhood. If you're looking for a platform that supports these capabilities, it's worth considering alternatives.

While not a trading fee, it's also important to note that Robinhood may charge fees for other services, such as Robinhood Gold, which offers additional features for a monthly subscription.

Robinhood's offering of commission-free cryptocurrency trading can be attractive, particularly to those just beginning their crypto journey. However, it's essential to understand the indirect costs that might come with trading, such as price spreads, and the limitations of the platform, including the inability to transfer cryptocurrencies.

Always remember that investing in cryptocurrencies involves risk. The value of cryptocurrencies can be highly volatile, and there's a risk of losing the money you invest. It's important to research thoroughly and consider seeking advice from financial professionals before jumping into cryptocurrency trading.

Please note that while Robinhood offers commission-free cryptocurrency trading, the details and availability of these services can change and may depend on your location. Always check the most current information directly on Robinhood's website or app. This blog reflects the state of Robinhood's services as of the latest update in September 2021, and the offerings may have changed since then.