Robinhood Deepens Crypto Push with New Blockchain Amidst Financial Setbacks
Robinhood is intensifying its cryptocurrency and tokenization efforts with the launch of its public testnet for a proprietary Ethereum layer-2 blockchain, Robinhood Chain. This move aims to facilitate the trading of tokenized real-world assets, including stocks and ETFs, and enable users to self-custody assets. However, this strategic expansion occurs as the company faces financial headwinds, reporting a significant drop in crypto-related revenue for the fourth quarter and missing overall revenue estimates, leading to a notable dip in its stock price.
Key Takeaways
- Robinhood has launched the public testnet for its Ethereum layer-2 blockchain, Robinhood Chain, built on Arbitrum.
- The new blockchain is designed to support tokenized real-world assets like equities and ETFs, with plans for a mainnet launch later this year.
- Robinhood reported a 38% year-over-year decrease in crypto revenue for Q4 2025, contributing to missed overall revenue targets.
- Despite the crypto slump, overall transaction revenue saw a 15% increase, driven by equity and options trading.
- Analysts reacted to the financial results with price target reductions, though some maintain a positive long-term outlook.
Robinhood Chain: A New Frontier for Tokenized Assets
Robinhood's new blockchain, Robinhood Chain, is built on Arbitrum and is intended to support the tokenization of traditional financial assets such as equities and exchange-traded funds (ETFs). Developers will have the opportunity to build on the network, which is designed to allow for 24/7 trading and self-custody of assets through Robinhood's crypto wallet. The platform also aims to facilitate cross-chain transfers and integration with decentralized finance (DeFi) applications on Ethereum. This initiative builds upon Robinhood's previous efforts in tokenization, including the rollout of tokenized U.S. stocks and ETFs for European users.
Johann Kerbrat, Robinhood's senior vice president and general manager of crypto, emphasized that the chain's development was not solely about scaling Ethereum but about creating a customizable environment optimized for tokenizing traditional assets. The goal is to embed compliance requirements directly into the chain, catering to the varying regulations across different jurisdictions. This approach positions Robinhood Chain as a specialized network for tokenized equities rather than a high-speed trading platform.
Financial Performance and Market Reaction
The launch of Robinhood Chain comes at a challenging time for the company's financial performance. In the fourth quarter of 2025, Robinhood reported a 38% year-over-year decline in revenue from crypto-related transactions, falling to $221 million from $358 million a year prior. This downturn in crypto trading activity, attributed to lower digital asset prices impacting retail investor volume, contributed to Robinhood missing its overall fourth-quarter revenue estimates. The company reported $1.28 billion in revenue, falling short of the $1.33 billion forecast by analysts.
Despite the crypto slump, Robinhood's broader business showed resilience. Overall transaction-based revenue increased by 15% year-over-year to $776 million, with gains in equity and options trading helping to offset the decline in crypto revenue. The company did, however, beat earnings per share (EPS) estimates, reporting $0.66 compared to the expected $0.63.
Following the earnings report, Robinhood's stock experienced a significant drop, falling approximately 10% in early trading. Analysts from firms like JPMorgan and Compass Point reacted by adjusting their price targets downwards. JPMorgan cut its price target to $113 from $130, while Compass Point lowered its target to $127 from $170. Despite these adjustments, some analysts maintain a constructive view, citing positive January Key Performance Indicators (KPIs) and potential long-term growth drivers in areas like crypto and DeFi expansion.
