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Robinhood’s crypto wallet is smart, risky — and inevitable

Hello and welcome to Protocol | Fintech! This Friday: Why Robinhood's rolling out a crypto wallet, JPMorgan's new core banking system, and decoding cryptospeak.
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Robinhood CEO Vlad Tenev has had fun teasing his brokerage's crypto customers who have been clamoring for a crypto wallet for months. Now comes the serious part.
After months of dropping "coming soon" hints, and occasional flashes of impatience in Tenev's tweets, Robinhood said it would begin testing a wallet starting next month, and has asked customers to sign up.The wallet — a "hot" wallet storing customers' private crypto keys online, with easy access for trading — is expected to be fully available to all users next year.
At last, we know when Robinhood's wallet is coming. But a more important question might be why.
Of course, "growing regulatory risks" describes the crypto business, too. Anywhere Robinhood looks for growth, it faces increasingly skeptical politicians and bureaucrats.
Meet Robinhood's "chief wallet officer." That's what Tenev called Christine Brown, Robinhood Crypto's chief operating officer, in May. She's a company insider who has oversight of its crypto business after being promoted from VP of product operations in April.
Robinhood is transforming into a crypto company before our eyes. And just as it's been a gateway app for many first-time stock-market investors, it needs to be the place to start with crypto, too.
"There's so much more of a market out there," Brown said of the crypto world. Gaining more exposure to crypto poses risks. But in light of the demand from customers, not jumping down the crypto rabbit hole could be the bigger risk..
-- Benjamin Pimentel
As of February 2021, roughly one year into the pandemic, the urgency around obtaining location intelligence had skyrocketed, with one survey conducted by Boston Consulting Group finding that 95% of executives view geospatial data/mapping as important to getting business results.
An SEC commissioner is now Robinhood's legal shield. Dan Gallagher, the online brokerage's chief legal officer, is the one who will have to deal with those crypto headaches.
For example, Gary Gensler saying that stablecoins are like "poker chips." The SEC chair has sent another strong signal that crypto will face intense scrutiny.
Cheer up, Vlad: At least you're not running Binance. The largest crypto marketplace is under fire everywhere from the U.K. to Thailand.
What fintech trend is most troubling for you?
Fintechs are typically focused on innovation, which is great, but many don't have the regulatory background, expertise and mindset to anticipate the changes we're going to see with the new administration. Democratic administrations typically take a more assertive approach to regulation and consumer protection. Now on top of that we are seeing an orientation toward racial justice and diversity. We're going to see intelligent and sophisticated takes on disparate impact, not just from federal regulators but from state regulators and attorneys general as well. Banks have been doing this for decades, and they still screw up.
What's been your biggest professional blunder and how did it help you?
It didn't end up being a blunder but at the time I know some thought it was! I'm an attorney and I was in private practice for a corporate firm very briefly out of law school. I didn't care for private practice at all. It was very competitive and male-dominated and there was a lot of backbiting — behaviors that I don't really like. So culturally, it wasn't a great fit for me.
One of my girlfriends from college was working in the same building for a subsidiary of a bank. She introduced me to her boss and he invited me to come work with them. It was very much accidental. I started in banking law basically doing transactional acquisitions of blocks of assets and then ended up having an opportunity to be groomed for the chief compliance officer position at a large national bank when I was very young. I was only 30 years old. It was just "right place, right time," and I had a great mentor, the general counsel of the bank who really wanted to get a young person in that role. So that was really kind of the start of my foray into the regulatory world, where I've been ever since.
What fintech sector or company is most underrated and overrated right now?
Underrated? Straight retail banks — regional banks like KeyBank, Fifth Third, Huntington here in Ohio — that used to be one thing, but have been trying hard to evolve.
Overrated? Retail trading. Most people should not be day-trading stocks, period.
That's the amount raised by restaurant fintech company Toast in its IPO. Shares popped on the first day of trading Wednesday but dropped on Thursday.
Thanks for reading — see you Tuesday!
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