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Robinhood restricts instant crypto buying

Yahoo Finance’s Alexis Christoforous and Dan Roberts discuss Robinhood’s move on Friday to shut off Instant Buying of crypto.

Video Transcript

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ALEXIS CHRISTOFOROUS: The trading app Robinhood not only in the news for its role in the frenzied trading around GameStop, AMC, and other speculative trades, but now Robinhood has restricted trading in cryptocurrencies after Bitcoin rose. It is up about 20% today. And even Tesla's Elon Musk helping to move Bitcoin after a tweet. We've got our Dan Roberts on the case. Dan, it looks like Elon Musk has been moving a lot of stocks lately, including GameStop and Etsy. What's the latest?

DAN ROBERTS: Yeah, Alexis. Elon Musk changed his Twitter bio to just say #bitcoin, which certainly accelerated the surge. I wouldn't attribute it all to Elon, but it probably had a big role here. And the other token that has been surging in the last few days is Doge Coin. I feel ridiculous even saying it, but it's a meme-based crypto that really has nothing behind it. No company, no business, but it's been around since 2014 and has, over the years, had a number of times where the price surges like crazy. Yesterday it was up more than 200%. Right now it's up about 100%.

Now because of those two coins, although Robinhood isn't explicitly saying that it's because of those two coins, Robinhood this morning turned off the ability for customers to use its instant buying feature with cryptocurrency. So the way that works, and it is a paid feature on the app, it allows you to transfer funds from your bank account and instantly access them for buying of stocks or cryptocurrencies before the funds have actually settled. And so Robinhood has turned that off and in a blog post and in a statement it has cited extraordinary market conditions. So obviously, Robinhood's saying, look, this is to protect customers.

But, you know, cryptocurrency users of the app are not pleased and it all comes after-- we know what happened yesterday, it's the biggest story in business-- the mania with GameStop and Blockbuster and all these other names. AMC. These '90s nostalgia-- some people called it the mall stocks, that just went nuts after Redditors kind of ganged up and said, let's buy these names to stick it to the shorts. And we know that yesterday Robinhood temporarily halted buying of those names and courted a lot of wrath by doing so. And there has been discussion and debate over exactly why Robinhood did it. Most likely, clearing house liquidity issue, but now hitting the crypto function.

ALEXIS CHRISTOFOROUS: Yes, it is. All right, thanks so much, Dan Roberts.