Robinhood expands ‘regulated territoryʼ through acquisitions

Robinhood Group is expanding its “regulated territory” through the mergers and acquisitions (M&A) of crypto platforms. The US zero-commission broker recently announced two acquisitions: with one Robinhood moves into the Canadian crypto market, while the other solidifies its European footprint and takes it into Asia.

Notably, Robinhood Marketsʼ acquisition of Bitstamp, completed on June 2, expands its UK presence. The deal gives users “an enhanced trading experience with a continuing commitment to compliance” worldwide, said Jean-Baptiste (JB) Graftieaux, chief executive officer of Bitstamp, in a statement.

On May 13, Robinhood also announced an agreement to acquire Canadaʼs WonderFi, which operates two of the country’s longest-standing “regulated” crypto platforms, with more than C$2.1 billion in assets under custody. The transaction is expected to close in the second half of 2025, subject to customary conditions, including regulatory, court and shareholder approvals.

An earlier attempt by Robinhood to enter the UK crypto market in 2022 — the planned acquisition of UK-registered crypto company Ziglu — collapsed. Ziglu is now subject to a voluntary undertaking and is returning assets to customers.

Regulatory scrutiny

Robinhood said: “Bitstamp holds over 50 active licences and registrations globally, and brings customers across the EU, UK, US and Asia to Robinhood.”

However, the UK Financial Conduct Authority (FCA) warned that changes in Bitstampʼs ownership could trigger additional regulatory scrutiny. For example, if an FCA-registered crypto-asset firm submits a change in control notice, an assessment of the beneficial owners will be carried out, according to an FCA spokesperson.

The assessment is in line with the fit and proper test under Regulation 58A of the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.

Founded in 2013, Robinhood and its various entities have attracted over $300 million in fines for a wide variety of compliance failures.

Robinhood back in the UK

Robinhood first tried to launch its application in the UK back in 2019, but its payment for order flow (PFOF) revenue model put it at odds with the FCA. PFOF — by which a broker routes orders to a market maker in exchange for a fee — is banned in the UK and the European Union.

Robinhood returned to the UK in late 2023 with a changed approach, compliant with the Markets in Financial Instruments Directive (MiFID II) best execution rules. It says it does not receive PFOF or any other inducements on UK customers trades. So far its UK stock trading app only offers trading on US shares and does not permit margin trading. It does not charge commission on trades and fees are low.

Robinhood did not respond to questions about its fee structure. The FCA also declined to comment on Robinhood’s business model and PFOF regulations.

Tools of fraudsters

Meanwhile, Bitstamp was used by fraudsters, according to a 2022 complaint to the UK Financial Ombudsman Service (FOS), with case reference DRN-3111233.

The complainant discovered “Blackstone 500” via social media and was persuaded to invest by an agent. She paid a registration fee, downloaded the agent’s trading app and created an account with Bitstamp.

The agent managed her trades and provided updates. She was told that she had made a profit but would need to pay an undisclosed tax to withdraw. After she sent two payments of £1,898.91 from her Santander bank account to Bitstamp, the agent disappeared and deleted all their text messages.

An investigator found the Contingent Reimbursement Model (CRM) Code did not apply, as the payments went to the complainant’s own account before being sent to scammers, and Santander did not view them as unusual.

The FOS did not uphold the complaint, citing that she had not paid the scammers directly but had instead transferred funds to a “legitimate” crypto exchange.

Further neobroker M&A

Elsewhere, UK-headquartered application Trading 212 also entered the German “commission-free” brokerage market in 2024, through the acquisition of FXFlat Bank GmbH.

Trading 212 Crypto holds a Class 3 crypto licence with the Cyprus Securities and Exchange Commission (CySEC), separately from Trading 212 Markets, which holds a Cyprus investment firm (CIF) licence.

In a statement, Trading 212 announced: “We are onboarding new clients in Germany through our [German financial regulator] BaFin-licensed broker FXFlat Bank GmbH, which Trading 212 acquired last year. Finally, Germany gets a local broker offering truly zero-commission investing.”

Trading 212 launched on the German App Store following the acquisition. German investors now have access to shares and exchange-traded funds (ETFs) from major global exchanges — including Xetra, the Nasdaq and the NYSE. FXFlat Bank GmbH is registered with BaFin as a securities institution (Wertpapierinstitut).

Trading 212 was originally established in Bulgaria in 2004, before being incorporated in the UK in 2013. The FCA register shows that Trading 212 is authorised, but some of the firm’s activities may not be protected.