After its crypto revenues plunged in Q1, Robinhood is stepping back from trading in digital assets. Meanwhile, E*Trade is planning to ramp up its crypto services. The divergence appears to reflect the distinct client bases each company serves.
Robinhood has long been a popular platform for trading, but its crypto-related revenue for Q1 2025 dropped to $252 million, down about 30% from the previous quarter. Over the same period, crypto trading volume on Robinhood fell by 35%.
Currently, cryptocurrency transaction-based revenue makes up more than 43% of Robinhood’s total transaction revenue. However, during a recent earnings call, CEO Vlad Tenev said the company plans to scale back its digital assets to avoid such fluctuations in the business.
“We’re diversifying the business outside of the crypto business, which will make us less reliant on crypto transaction volumes,” Tenev said during the call.
A Wealthier Client Base
At the same time, Morgan Stanley is exploring ways to add crypto trading to its E*Trade platform—described as the most serious move yet by a major U.S. bank to give retail users direct access to cryptocurrencies. The initiative is expected to roll out sometime next year.
Why the two different approaches for the rival trading platforms? It comes down to the client base.
“Robinhood depends heavily on retail trading, so their revenues are highly volatile,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Volume can swing dramatically from month to month depending on crypto prices. They’re looking to stabilize their revenues with more consistent streams. I also think Robinhood may have maxed out their product in crypto for now.
“Morgan Stanley has much higher net worth clients than Robinhood’s mainly retail client base,” he said. “High-net-worth individuals want regulated secure access to crypto. With the regulatory tailwinds we’ve been seeing, high-net-worth investors are starting to anticipate the growth of tokenization in the coming months.”
Heated Competition
The big banks’ entry into trading crypto may be another factor behind Robinhood’s recent pullback. Other major financial institutions, including Charles Schwab and SoFi, have also been exploring entry into the crypto space.
E*Trade, meanwhile, already offers its wealthier clients access to crypto exchange-traded funds, options, and futures contracts.
