Financial trading application Robinhood with its 10.9 million monthly active users and onchain portfolio of $17.2 billion is a crypto juggernaut. Johann Kerbrat, crypto general manager at Robinhood, sat down with Unchained for a Q&A conversation. 

Kerbrat offered his outlooks on the crypto space as it stands currently, a giant soup composed of several elements such as the impact of SEC’s interaction with crypto projects, the lack of clarity in the political landscape of the U.S., and the reasons why Robinhood rejects a token for listing. 

Highlights of the interview:

• How Robinhood is “in the same process as Uniswap Labs,” in both receiving Wells notices from the U.S. Securities and Exchange Commission.
• Why “the lack of clarity in the U.S. was one of the main reasons we went into the EU.”
• How decentralization is one aspect of Robinhood’s consideration on whether to list a token.

Q: Please introduce yourself. 

A: I’ve been at Robinhood Crypto for a bit more than three years and joined initially as a CTO, being an engineer all my life. I joined crypto back in 2010. At the time, everyone was wondering, “Why do we need crypto,”  Why do we need Bitcoin,” [and] “What is it?” 

Now Bitcoin is not even a question anymore. Institutions are buying it everyday through ETFs. We’ll see more active use cases for real users in the U.S. and in other countries.

Q: Uniswap responded to their Wells notice on May 21. Do you have any broad takeaways after glancing at their response? 

A: We’re in the same process as Uniswap Labs. We received our Wells notice recently as well. For me, the main takeaway is the need for regulatory clarity in the U.S. regarding what are securities and what are cryptocurrencies. We strongly disagree that any of the assets we offer on the platform are securities and we have a very extensive process to list any token or assets on the platform, which includes a securities analysis. 

In the past, we’ve been trying to engage with the SEC. We’ve met with them 16 times [at the time of the interview] to try to register and at this point we were fairly disappointed with how the SEC has been responding. We just hope that we will get clarity soon.

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Q: After meeting with the SEC several times, were you surprised Robinhood received a Wells notice from them? 

A: Well, definitely disappointed. We tried to engage. We tried to register when the chairman publicly said that companies should come and register.

Q: Given the current crypto-political landscape – increased optimism stemming from SEC’s actions regarding spot ETH ETF, but also several crypto firms receiving Wells notices, regulatory framework in the U.S. remaining unclear – are there any action items for you or Robinhood on the regulatory front? 

A: The Financial Innovation and Technology for the 21st Century Act is a good path forward. It’s at least bringing clarity and a framework that we can abide on. If you think about Robinhood, we have a broker-dealer, we have a crypto platform, we are regulated by the Financial Industry Regulatory Authority, by the SEC, by the New York Department of Financial Services. We are a platform that knows how to work with regulators and knows how to engage with regulators. If at this point, we are still not in the situation where we can gain clarity, there is clearly a problem. Hopefully, we’ll see results from this bill to move forward, but for us the lack of clarity in the U.S. was one of the main reasons we went into the EU. There is a clear framework, MiCA, coming in Jan. 2025 and it’s surprising to me that the U.S. is behind the EU to adopt a clear framework for cryptocurrency. 

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Q: Can you pinpoint specific elements of the U.S. regulatory ecosystem right now that are starkly different from those abroad?

A: Just the crypto problem is interesting, like we have a chairman saying that you need to come in to register with the SEC. We’ve been trying to register but haven’t been successful. Even if you’re able to register, there’s still the problem of the issuer of the assets. 

At this point, just seeing how many millions of American customers are exposed to cryptocurrency and not being able to have this clarity is a problem. We took a very safety-first approach: We only listed 15 assets on the platform [and] we never offer staking. There is this two-sided situation where you can decide to either be safe and still receive a Wells notice from the SEC or you can decide to be aggressive and still have issues as well. 

Q: What’s the most common reason for Robinhood to reject a token for a platform listing? 

A: It really depends. There is a decentralization aspect. If it’s a proof-of-work chain, is there enough mining power that is decentralized to make sure that the chain is not going to rug pull or something like that. If it’s a proof-of-stake chain, are there enough validators or sufficient decentralization within the validator group. 

There are also operational reasons ,like having enough liquidity. Are there enough ways for us to support the assets? Do we have enough market makers and liquidity providers supporting it? So, a bunch of reasons. I don’t think that there is one more than the other. We want to have a safety-first approach. 

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Q: What do you think the SEC approving a spot ETH ETF means for the rest of the world?

A: I don’t know if it will mean too much. I think people haven’t looked really to the U.S. for regulatory clarity in the past. What’s great is it just brings more institutions into the game and more weight into the cryptocurrency ecosystem. 

Q: Professionally or personally, what blockchain networks/protocols are you really active on?

A: Personally – and not investing advice or anything like that – I’ve been trying to look at almost every new chain and really understand what they bring, why they are different, what type of applications are built on the chain. 

I’ve been really active on Base lately. For me, understanding some of the applications on it like Friend.Tech and seeing how people are using it is really important for us to understand where do we need to implement more. 

We’ve also been lately very active with Arbitrum. We announced a partnership a month or two ago at this point, and that’s been something that we’ve been really excited about. 

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Q: Robinhood users are pretty diverse, but who are the most loyal and most sticky users among the people that own crypto? 

A: At Robinhood, 50% of our investors are new investors, so before they didn’t necessarily have a brokerage account. We also have a very diverse demographic, a lot of them are millennial and Gen Z. For me, that’s been the most exciting. It’s really opening the door and bridging the wealth gap between generations. 

On the crypto side, we’ve seen a really diverse group. Some people are really active traders and they buy and sell a lot on the platform on a daily basis or even on an hourly basis and some people are older where they buy and wait multiple years. The difficulty in my job is needing to cater to all of them and build features that work for all of them.