The highly anticipated “fee free” trading platform from Robinhood has officially launched, providing more than 4 million platform users with the ability to buy and sell Bitcoin and Ethereum without commissions. Is the platform really free, though?

Robinhood’s launch has undoubtedly generated hype. However, there are a number of potential issues with the platform that have largely flown under the radar of the crypto community. Robinhood announced the launch of their crypto trading service via their blog on the 22nd, promising users the ability to access their investments “commission-free, on one platform.”

Access to the Robinhood Crypto platform is strictly limited to users based in California, Massachusetts, Missouri, Montana, and New Hampshire at this point in time, with the Robinhood “exchange” planning on releasing crypto trading functionality in more US states at a later date.

Cryptocurrency trading on the Robinhood platform is live and rolling out to the first set of customers starting today. #DontSleep https://t.co/OqnVYkKeYL — Robinhood (@RobinhoodApp) February 22, 2018

Based in Palo Alto, the US-based Robinhood app offers a wide range of stock brokerage services, and already offers market data on 16 different currencies that include Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Ripple. The launch of Robinhood’s crypto trading features hase been accompanied by massive hype levels, promising “fee-free trading.”

An announcement of the impending launch of their crypto trading solution in late January, causing interest in the Robinhood app to spike by almost 1 million users:

“Together, we reached four million users and well over $100 billion in transaction volume on our brokerage platform, leading to over $1 billion in commissions saved in equity trades. With the release of Robinhood Crypto, we’re continuing our mission of making the financial system work for everyone, not just the wealthy.”

The marketing and hype surrounding Robinhood’s crypto trading service, however, appears to be based on poorly represented or misinterpreted information; trading crypto on Robinhood is more than likely not actually free.

How Does Robinhood Crypto Work?

Firstly, Robinhood is not an exchange. Robinhood co-founder Vlad Tenev outlined the specifics of the platform’s crypto functionality in an interview with CNBC last month, stating that Robinhood Crypto is not offering exchange services, but simply uses existing exchanges to facilitate trades, listing them in aggregate via the Robinhood app in what is presented as a loss leader promotion:

“We will connect to many exchanges, up to a dozen or more, over the next several months, We want to break even on this business, not to profit from it. We view this as an opportunity to expand our customer base and give our customers more access to functionality.”

What this means for Robinhood crypto users is that trades performed via the Robinhood app are potentially not “fee-free”— they’re free of any additional fees from Robinhood, but are likely still subject to trading fees charged by the exchanges the trades are performed upon.

Whether or not Robinhood is able to access better trading fees or almost a no-fee rates at the exchanges it integrates with is not clear, but it’s highly unlikely the platform would willingly absorb the exchange fees associated with the volume Robinhood expects without passing them on to users.

Robinhood has also not yet provided any public information regarding which exchanges will be used to execute trades ordered via the Robinhood app, nor have they detailed the rates at which they will be executing trades on their connected exchanges.

Users Cannot Withdraw Cryptocurrency

While the Robinhood Crypto launch may drive increased adoption and deliver a positive impact on market values due to an increase in exchange-executed trades commissioned by their brokerage service, users that choose to purchase cryptocurrencies via Robinhood are severely restricted in terms of what they are actually able to do with their purchased crypto.

Robinhood has not provided any details on how cryptocurrency wallets will be managed, with several media reports indicating that a “third-party wallet provider” will be used to manage hot wallet funds. The lack of information on how hot wallet currency will be managed by the platform is certainly worth note.

The most curious element of the Robinhood Crypto service, however, is the fact that users are unable to withdraw cryptocurrency, and cannot deposit cryptocurrency into their Robinhood account directly. It’s safe to assume, based on this fact, that Robinhood will not be providing users with access to their public wallet addresses.

Robinhood has also flip-flopped on cryptocurrency withdrawal availability. Prior to the launch of the Robinhood Crypto service, the Robinhood Crypto FAQ stated that it was possible to withdraw crypto if sufficient ID requirements were met:

“Can I withdraw my coins?

Yes. To get started with this process, you’ll need to send additional verification to customer support for security purposes. We’ll need a copy of:

Your bank statements

Two government issued IDs (front and back)

A selfie with your ID

Keep in mind, transfers and withdrawals can take up to one week. Any fees incurred in this process, such as network and mining fees, will be passed along to you.”

The FAQ page now explains that it’s not possible to withdraw cryptocurrency holdings:

“At this time we don’t support coin withdrawals, however, we plan to do so in the near future.”

The same page also explains that it’s not possible to transfer existing cryptocurrency assets into a “Robinhood Crypto Account”. Put simply, the Robinhood Crypto service appears to be a walled garden environment in which users are able to “purchase” cryptocurrency assets that they don’t really own in the common sense of cryptocurrency, don’t control, and can’t withdraw.

Looking to the Future

While Robinhood may be brand new to the crypto space, clearly it has generated enough attention to be a potential worthwhile competitor to Coinbase. In its early stage, it seems likely that Robinhood will continue tweaking its product offering to be in the best interests of the crypto community and its users. We will wait with anticipation as Robinhood’s product matures and works through its growing pains.