One day after the Robinhood trading app stopped buying red-hot stocks like GameStop and AMC, which angered customers, the app eliminated a key feature for buying cryptocurrency on Friday.
The paid feature, Instant Buying, allows customers to transfer money from a bank account and use the funds immediately before they are settled.
“Due to exceptional market conditions, we have temporarily turned off Instant Buying Power for crypto,” Robinhood said in a statement to Yahoo Finance. ‘Customers can still use settled funds to buy crypto. We will continue to monitor market conditions and communicate with our customers. ”
Robinhood did not say in his statement or in his blog post about the restriction what the extraordinary conditions were, nor did he mention specific cryptocurrencies.
But bitcoin (BTC-USD) rose 15% on Friday, a bounce accelerated by Elon Musk on Twitter; and meme-based token dogecoin (DOGE-USD) rose 165%, fueled by social media.
It was not just Robinhood. Amid market mania, TD Ameritrade and Schwab this week placed restrictions on margin trading in the rising stocks, limiting how many customers could borrow for transactions; Webull, an app that Robinhood users fled to after restricting Robinhood, also restricted the purchase of the same shares. The actions are considered clumsy for cryptocurrency and DeFi (decentralized financing applications) because they can bring new entrants into a space without traditional financial intermediaries.
Following Robinhood’s performance this week, the technical unicorn, which has a valuation of $ 12 billion and plans to be unveiled this year, is in hot water with everyone, from lawmakers to customers.
Rep. Alexandria Ocasio-Cortez, New York Senator Ted Cruz, and California Representative Ro Khanna are just a few of the politicians to issue statements of outrage over Robinhood’s actions Thursday, which are seen as damaging to retail investors. Robinhood has already been hit with a lawsuit from customers over these events. And the company is raising a $ 1 billion emergency in new funds to cover its money shortfall.
In a blog post on Thursday, Robinhood said that the cessation of buying for rising shares was a ‘risk management decision’ and that: ‘We have net capital requirements from the SEC and the deposits of clearing houses … Some of these requirements vary widely volatility in the market, and this can be significant in the current environment where there is a lot of volatility and a lot of concentrated activity in these names that has gone viral on social media. ”
And in a series of tweets Thursday afternoonCEO Vlad Tenev said the app’s decisions on Thursday were “not made on the basis of any market maker we are heading to or from other market participants.”
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Daniel Roberts is editor-in-chief at Yahoo Finance and has been dealing with bitcoin since 2011. Follow him on Twitter at @readDanwrite.
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