Robinhood Takes Equity Stake in Crypto.com, Taps Exchange to Power Prediction Markets
Robinhood, a popular trading app, has announced a significant move into the world of prediction markets. The company has taken minority equity stakes in both Crypto.com and OG.com, the prediction markets platform launched by Crypto.com in February. This deal marks a major development in Robinhood's efforts to expand its prediction markets business, which has seen rapid growth in recent months.
Context and Background
Prediction markets allow users to trade contracts on the likelihood of specific events occurring, such as the outcome of a sports game or the result of a presidential election. This concept has gained significant traction in recent years, with platforms like Polymarket and Kalshi becoming popular destinations for users looking to engage in this type of trading. Robinhood has been at the forefront of this trend, leveraging its existing user base to build a thriving prediction markets business.
Robinhood's prediction markets hub was initially built on top of Kalshi's contracts, but the company has since shifted volume to its own CFTC-licensed exchange, Rothera, which it operates in partnership with Susquehanna International Group. However, with the addition of OG.com, Robinhood now has a third infrastructure supplier, reducing its dependence on a single provider.
The Deal and Its Significance
Under the agreement, OG.com will become an infrastructure and clearing provider for Robinhood, processing and settling trades once a customer places a bet. Robinhood will route its retail volume through OG.com's exchange, which is regulated by the Commodity Futures Trading Commission (CFTC). This deal is significant because it gives Robinhood a major boost in its efforts to expand its prediction markets business.
The equity stakes in Crypto.com and OG.com are valued at $20 billion and $5 billion, respectively, with the latter's standalone spin-off marking a major milestone for the company. Crypto.com's founder and CEO, Kris Marszalek, has framed the tie-up as a "game-changer," with the goal of making OG.com the most liquid venue globally for innovative derivative instruments.
Market Reaction and Next Steps
The market reaction to the news has been positive, with shares in Robinhood (HOOD) climbing 3.4% in premarket trading to around $126. Crypto.com's native token, CRO, has also seen a notable bounce, jumping over 6% to its current price of $0.06. The rollout of the deal will begin in phases to eligible U.S. customers starting September 8, with both companies already flagging the next step: equity-linked perpetual futures, pending regulatory clearance.
Implications and What to Watch Next
The deal between Robinhood and Crypto.com has significant implications for the prediction markets space. With the addition of OG.com as an infrastructure and clearing provider, Robinhood now has a more robust and diversified platform for its users. This move is likely to further accelerate the growth of prediction markets, as more users become aware of the opportunities available on these platforms.
As the rollout of the deal progresses, it will be interesting to see how users respond to the new infrastructure and clearing provider. Will the addition of OG.com lead to increased trading volumes and liquidity on the platform? How will the introduction of equity-linked perpetual futures impact the market? These are just a few questions that will be answered in the coming weeks and months as the deal continues to unfold.
Conclusion
The deal between Robinhood and Crypto.com marks a significant development in the world of prediction markets. With the addition of OG.com as an infrastructure and clearing provider, Robinhood now has a more robust and diversified platform for its users. As the rollout of the deal progresses, it will be interesting to see how users respond to the new infrastructure and clearing provider, and what impact it has on the market as a whole.