Robinhood's default crypto order routing embeds a 2% round-trip spread, drawing sharp criticism from industry analysts over retail execution costs and transparency.
Robinhood's default crypto order routing embeds a roughly 2% round-trip spread and its engineers face insider trading charges, raising reputational and regulatory risk.
Bitcoin's price is not directly affected, but Robinhood's wide BTC spread highlights retail execution quality and liquidity concerns on the platform.
Robinhood faces criticism after disclosures revealed a nearly 2% round-trip spread on Bitcoin trades routed through its default market-maker system. While the firm offers an alternative 'Smart Exchange Routing' option with lower fees, the high cost of the default setting has sparked concerns regarding retail execution quality and the transparency of hidden costs for AI-driven trading agents.
The cost is embedded in the spread—the difference between the buy and sell price—rather than a transparent fee. Robinhood's default market-maker routing sends orders to third-party firms, which pay Robinhood for order flow, resulting in a wider spread for the end user.