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Robinhood Restricts Cryptocurrency Buying and selling Amid Dogecoin Saga

Picture: Aziz Abdel-Qader

Robinhood is seemingly able to face extra anger after pulling plug on retail buyers searching for to ‘immediately’ purchase cryptocurrencies on its no-fee app. The dealer has quickly disabled some cryptocurrency purchases simply as Bitcoin rose 20% and Dogecoin soared 800% in 24 hours.

“Because of extraordinary market circumstances, we’ve quickly turned off Prompt shopping for energy for crypto. Prospects can nonetheless use settled funds to purchase crypto. We’ll preserve monitoring market circumstances and speaking with our clients,” a Robinhood spokeswoman stated on Friday.

Now, customers of the free-commission app can solely purchase cryptocurrencies with money they already deposited of their accounts. In the event that they need to purchase extra, it takes as much as 5 enterprise days to obtain and clear their common deposits.

Earlier than that, Robinhood buyers have been allowed to make use of a so-called “Prompt Shopping for” characteristic which tops-up a dealer’s account with forthcoming deposits to sure limits till his cash transfers undergo.

The brand new restrictions are believed to be a results of frenzy shopping for round Dogecoin, a cryptocurrency created in 2013 impressed by the favored meme of the Shiba Inu canine. The joke-based coin has seen its market worth soar by greater than 800% in a single day after discussions on a Reddit group referred to as SatoshiStreetBets, much like how WallStreetBets sparked the resurgence of GameStop inventory.

Behind the meteoric rise was additionally Tesla founder, Elon Musk who tweeted a digital journal cowl that includes a canine in obvious assist of Dogecoin. Followers of the world’s richest man acknowledged the tweet as an endorsement to the present rally in Dogecoin.

pic.twitter.com/a6kmk0PEgM

— Elon Musk (@elonmusk) January 28, 2021

As a result of cryptocurrency buying and selling is unregulated, there aren’t any guidelines to cease mass shopping for or panic sell-off. Funding apps can solely cease or prohibit their customers buying and selling since they don’t have computerized brakes that apply as soon as an asset strikes by a specific amount – as occurred in Dogecoin case.

The brand new restriction got here a couple of hours after Robinhood reopened restricted shopping for of the beaten-up online game retailer GameStop inventory and different meme securities. Robinhood attributed its earlier choice to ban buying and selling to complying with the SEC necessities round internet capital obligations and clearinghouse deposits.

Robinhood, identified for permitting people to take a position with out paying buying and selling commissions, blocked customers Thursday from buying GameStop, AMC, and others after the shares skyrocketed in worth.

Robinhood customers, nonetheless, stated the freeze harmed their buying and selling whereas favored Wall Avenue’s hedge funds and deep-pocket buyers.

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