The chaos on Wall Street has apparently affected the crypto sector
Yesterday, US-based commission-free online broker Robinhood announced that it would stop trading some stocks. The move has sparked an uproar among traders and investors who are currently over a barrel. Many have questioned Robinhood’s rationality of holding its customers’ crypto assets.
The option to move the assets to another destination is also not provided as the broker has also blocked crypto withdrawals. Crypto users are now facing a nightmare as they find themselves on a dead end. To leave the platform, customers must exchange their crypto for cash. However, this adds to the dilemma they currently find themselves in.
Selling the crypto means users have another tax problem (arising from capital gains) to worry about. For crypto investors currently using the platform, there is hardly any way out, let alone an easy one.
Robinhood was founded in 2013 and started out as a broker platform for trading stocks and ETFs. The online broker then rolled out crypto services after bringing a wave of retail investors on board. Robinhood gradually introduced Bitcoin and Ethereum trading on the platform in early 2018.
However, the recent turn of events around the platform has put them on the wrong side of dealers – some say the platform has started robbing the hood. The platform’s crypto exposure model has been flawed and heavily criticized. While Robinhood offers its customers the ability to use cryptocurrencies, it is not intended that customers transfer the assets to a wallet of their choice.
The biggest challenge facing Robinhood crypto users right now is to pull their assets off the platform without incurring tax consequences. Industry experts believe the situation is an eye opener and is a reminder to traders that using brokers to trade crypto is not ideal.
Investors with crypto on the platform will have to take the tough approach and potentially buy actual assets that they can hold for themselves.