Kraken now trades stocks. Robinhood is growing its crypto franchise. And Coinbase? It’s drilling deeper into DeFi.

It’s a dynamic moment in the trading game but one thing is certain — the race to win over investors is spurring major strategic moves by the biggest players in crypto.

This week, Kraken, the second biggest US crypto marketplace, shook up the playing board by launching commission-free trading for more than 11,000 US equities and exchange-traded funds.

Its campaign takes square aim at Robinhood, the Silicon Valley-based online brokerage that popularised zero-commission trading and has made deep inroads into crypto trading.

“This is a smart move,” Luke Nolan, analyst at CoinShares told DL News. “It makes sense to offer people a one stop shop to trade crypto and traditional assets alike.”

But Kraken will have its work cut out for it.

Walletshare

For starters, there’s Robinhood’s sheer scale. Robinhood manages $187 billion in assets and has 26 million customers, an 8% jump from 2023.

Moreover, the listed company boasts one of the most vaunted user-friendly platforms in the brokerage game, which enables it to expand its “walletshare” for customers by constantly adding new products such as debit cards, and of course, crypto offerings.

This is a key reason why its shares have spared 135% in the last 12 months, which is 37 times better than longtime market giant Charles Schwab.

After offering crypto trading beginning in 2019, Robinhood made a breakthrough in the fourth quarter last year when its digital assets-driven sales surged 700%, to $672 million.

Now Kraken, which handles about $1 billion in daily trading volume and has 15 million customers, has set out to defend its turf by jumping into Robinhood’s core market — stocks.

Stocks crypto mashup

Last month, Kraken kickstarted its push with plans to acquire NinjaTrader, a retail investing trading firm, for $1.5 billion.

In the meantime, the exchange is rolling out a platform to let customers reinvest sales proceeds from stocks into crypto, and vice versa, and trade fractional pieces of high-priced stocks.

The mashup between stocks and crypto has been evolving for some time.

But there’s more urgency now because for all the excitement that rallied the market after the US election of Donald Trump as president last November, investors remain wary.

The fallout from FTX’s failure in 2022 is still hanging over the industry, as is more recent outrage over memecoin pumps and dumps.

According to Security.org, crypto ownership in the US has declined by five percentage points since 2022, to 28%.

Others just aren’t sold on the underlying tech. Four out of 10 non-crypto holders said they are “very unconfident” in the technology’s safety and security.

At the same time, almost half of investors between the ages of 19 and 29 are likely to invest in stocks in 2025, according to the Kraken’s own data,

That number falls slightly for traders between 30 and 44 years old.

Drilling deeper

“Crypto exchanges and broker-dealers are building for what the future of investment platforms could look like,” said Bernstein in a Tuesday note to investors.

Meanwhile, Coinbase, the biggest US exchange with 250 cryptocurrencies, is focused on drilling deeper into blockchain-based assets.

In 2023, Coinbase developed its own layer 2 blockchain, called Base, to run in parallel with its core platform.

Base, which allows for speedier and cheaper Ethereum-based transactions, had delivered for CEO Brian Armstrong and his team.

Biggest players

It is now the biggest Ethereum layer 2 with $2.8 billion in deposits, and the sixth largest blockchain overall, according to DefiLlama.

Kraken is now developing its own Ethereum rollup, called Ink.

On the institutional investing side, Coinbase holds more than 11% of Bitcoin’s entire supply in its Prime Custody service, managing funds for some of the biggest players in the industry, including Michael Saylor’s Strategy.

For all of Coinbase’s prowess, its shares have tumbled more than 21% in the last 12 months compared to a 38% jump in Bitcoin’s price.

There may be a lesson there for Kraken, which is apparently keen on mounting its own initial public offering this year.

Yet for now, the exchange is focused on a task that’s hard enough — challenging Robinhood in the race for stock investors.

Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com. Edward Robinson is the story editor for DL News. Contact the author at ed@dlnews.com.