Robinhood pauses instant buying of crypto currencies amid volatility
(Reuters) - Online broker Robinhood, which was criticized by customers after pausing trading in some hot stocks on Thursday, said it had temporarily disabled a feature on its app that allows users to buy crypto securities instantly.
“Due to extraordinary market conditions, we’ve temporarily turned off Instant buying power for crypto. Customers can still use settled funds to buy crypto. We’ll keep monitoring market conditions and communicating with our customers,” a Robinhood spokeswoman said on Friday.
Through the “Instant Buying” feature on Robinhood, customers have instant access to funds from bank deposits and proceeds from stock transactions. Instant Buying is a paid feature that allows users to instantly settle transactions.
Robinhood reportedly restricts crypto trading temporarily ‘due to extraordinary market conditions’ as Bitcoin and Dogecoin spike sharply
Robinhood limited cryptocurrency trading due to “extraordinary market conditions” on Friday, CNBC said.
A spokesperson told CNBC customers can still use available deposits in their accounts to buy crypto.
The brokerage’s restriction came as the prices of Bitcoin and Dogecoin spiked sharply on Friday.
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Robinhood limited cryptocurrency trading on its platform Friday following the soaring prices of Bitcoin and Dogecoin, CNBC reported.
“Due to extraordinary market conditions, we’ve temporarily turned off instant buying power for crypto,” a Robinhood spokesperson told CNBC. “Customers can still use settled funds to buy crypto. We’ll keep monitoring market conditions and communicating with our customers.”
Earlier in the day, traders on Robinhood were unable to make new deposits for cryptocurrency purchases. They could buy cryptocurrencies only with the existing deposits in their accounts, which can take five business days to clear, CNBC said.
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The price of Bitcoin surged 15% on Friday to $38,089.94, after Elon Musk changed his Twitter bio to “#bitcoin.” Musk’s tweets have prompted recent frenzies into the shares of video-game retailer GameStop and digital token Dogecoin. The meme-based cryptocurrency that started as a joke soared 336%, to $0.054 on Friday, pushing it into the top 10 cryptocurrencies by market cap, according to data from Coin Gecko.
Robinhood did not immediately respond to Insider’s request for comment.
The platform had also restricted trading of highly volatile stocks like GameStop, AMC, BlackBerry, and others on Thursday before the market open, saying it continuously monitors the markets and makes changes where necessary. It later loosened restrictions and reopened limited buying.
But day traders and some lawmakers sharply criticized the brokerage for leaving its users unable to buy some Reddit-touted stocks. On livestream video service Twitch, Rep. Alexandria Ocasio-Cortez called Robinhood’s decision unacceptable and said more information was needed.
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Robinhood Shuts Off Instant Deposits Feature For Cryptocurrency Trading
Traders hoping to wake up to a return to some form of normalcy might have to wait until next week after Robinhood is temporarily suspending a popular feature among its cryptocurrency users.
What Happened: Robinhood users reported early Friday morning they couldn’t use instant deposits for crypto purchases. This means that users can only buy cryptocurrencies with cash that was already deposited in their accounts.
Robinhood’s Instant Deposits feature fronts customers up to $1,000 until their pending deposit clears.
“Due to extraordinary market conditions, we’ve temporarily turned off Instant buying power for crypto,” a Robinhood spokesperson told CNBC.
Customers can still use the cash already settled in their account to trade as normal.
Robinhood’s decision immediately follows an 800% surge in the digital “doge” coin. The coin was created as a joke and trades in the pennies.
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Why It’s Important: Robinhood, the popular trading app that shocked many users by heavily restricting trading of GameStop Corp. (NYSE: GME) and other stocks on Thursday, is making headlines again. But this time around the reaction is mixed.
Some users on Twitter note customers are restricted from using borrowed money to place trades and have full access to their cleared cash.
To start FRI 29-JAN-2021 @RobinhoodApp #RobinHood isn’t allowing Instant Access to Deposits FOR CRYPTOS only…liquidity is a significant issue for any FI…this is understandable, just don’t block retail investors from buying securities with their available cash plz TIA pic.twitter.com/M0DxdQG51j — Screaming Lincolns (@ScreamLincolns) January 29, 2021