"What a difference a changing regulatory environment makes. Roughly nine months after suggesting that a young copy trading platform could only operate because it flew "under the radar" of regulators, Robinhood has announced its own entry into the space with "Robinhood Social," a new feature that will allow users to follow and manually replicate the trades of prominent investors. The move represents a striking about-face for the online brokerage, which has historically been cautious about features that could attract regulatory scrutiny."
"This wariness was on full display in a December, when in a conversation with this editor about upstart copy trading platform Dub, Robinhood CEO Vlad Tenev suggested that such platforms could operate primarily because of their smaller size, proposing that "copy trading could become of greater interest to regulators" and that Dub may not yet be under the "magnifying glass" because of its "comparatively smaller size.""
"The timing is particularly notable given the pointed criticism Robinhood faced earlier this year from Dub's 23-year-old founder Steven Wang, who has positioned his platform as a more educationally-focused alternative to traditional trading apps. "I have a lot of respect for what [CEO] Vlad [Tenev] has done in making trading free," Wang told me back in February. "But at the end of the day, making it super easy to trade without expert guidance, without education, is really just gambling for the broader population.""
Robinhood announced "Robinhood Social," a feature allowing users to follow and manually replicate trades of prominent investors. The company previously avoided potentially gamified features, removing a celebratory confetti feature before its 2021 IPO after regulators raised concerns. In December, Robinhood CEO Vlad Tenev suggested that copy trading could draw greater regulatory interest and noted smaller platforms might escape scrutiny due to comparative size. Robinhood now appears to judge that the regulatory environment has shifted enough to enter copy trading. Dub founder Steven Wang criticized easy trading without education as effectively gambling for the broader population.
Read at TechCrunch
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