Source: Anthony Pompliano

Compiled by: Felix, PANews

Johann Kerbrat is the Senior Vice President of Robinhood and General Manager of Cryptocurrency and International Operations, responsible for leading the company's expansion in digital assets and global markets. Johann discussed the rise of all-weather trading, Robinhood's expansion in areas such as tokenization and prediction markets, and how AI is reshaping financial products on Anthony Pompliano's podcast.

PANews has compiled the highlights of the conversation.

Host: With the ongoing conflict in the Middle East, as one of the largest retail trading platforms in the world, are retail investors buying, selling, or are they in panic or calm?

Johan: It depends on the weekend situation, as a lot has happened over the past few weekends. But so far, what we have seen is that many customers are actually buying the dips and trying to keep up with the market changes. Bitcoin's price has been fluctuating, but if you look back over the past 12 months from February of last year, it has been quite resilient. Overall, I think the advantage of Bitcoin and cryptocurrencies is that it operates around the clock. When events happen over the weekend, people can actually use that information to trade and build positions.

Host: Trump always seems to wait until Friday afternoon to announce good or bad news, and the after-hours market and cryptocurrency react accordingly. Then every Sunday afternoon, like an hour before the futures market opens, he says something else, and the markets fluctuate again. You have always been pioneers in after-hours trading and trying to get as close to 24x5 trading hours as possible. How is it now?

Johan: Yes, 24x5 trading is live and has been operating from Sunday evening at 8 PM. Although it does not cover all stock tickers and has limited functionality, it's very interesting. As you said, there’s always something happening on weekends or weekday nights; additionally, we have some customers in the UK who want to enter the market while they are awake rather than waiting for the US market to open. Therefore, I think we will gradually move towards all-weather (24x7) trading. This will not only provide trading opportunities but also balance the needs of different users. Because the futures market opens earlier on weekends than the stock market, less experienced investors may have to wait for the stock market to open.

Host: When these investors come in looking for targets, you currently have stocks, cryptocurrencies, and prediction markets; it seems you have been actively pushing the development in these areas. How blurry are the boundaries between them? Or do you see a lot of cross-investment?

Johan: This is a significant advantage for Robinhood; you can have everything in one place. You also have options and futures, and the appeal of the platform is that you can truly switch between different assets without having to move funds between different platforms, and you can create complex strategies. For example, we see some people buying ETFs, buying cryptocurrency spot, and also using prediction markets or futures to hedge their positions. Now with the introduction of AI, things are becoming increasingly complex, and you'll see more and more such strategies appearing in the market.

But for us, what we truly focus on is accessibility: if you want to put all your financial investments and wallets on Robinhood, you need to be able to access all products. We should not decide for customers which products are good or bad but should provide them with access and educational tools to ensure they understand what they're doing.

Host: Do you think people use prediction markets for hedging, or is it just speculation and gambling?

Johan: Both. Indeed, some people use it just because they are interested in sports, but we also see many people using our new contracts. Using AI as an example, if you want to invest in AI now, you can pick a stock like Nvidia, AMD, or Google, but the returns remain uncertain; Nvidia might perform poorly one quarter, or contracts might not be fulfilled, etc. Whereas prediction contracts in the AI space are much simpler and yield relatively fixed outcomes for customers. I think this is important, as it provides these investors with alternative options for investing in the market.

Host: That's interesting; some people try to make complex contracts, but there are also contracts that make me think, "What are we doing?" For example: How long is a press conference, or what color tie someone is wearing—this is purely speculation, maybe it has entertainment value, but I think no one is hedging for "What color is the Gatorade at halftime."

Johan: That makes sense. In fact, Robinhood has spent a lot of time researching which contracts to release on the platform. For instance, we do not do the contracts you just mentioned. We have worked with regulators for a long time and know what can become an issue, so we have avoided many such contracts and focused more on those that might impact actual predictions.

Host: You currently have 8 business lines with at least $100 million in revenue; is it more now?

Johan: Yes, 11 lines.

Host: Well, it feels like a bunch of startups stuffed into a big company. How do you build products internally? With the rise of AI, it seems you might be getting faster; I guess AI plays a role in that.

Johan: Yes, this is driven by a combination of factors. We have a very good structure where almost every product line operates like a small startup within the company. CEO Vlad and the whole company built a great architecture: each line of business can advance in its own direction, but we are also committed to creating a cohesive UI and UX, so when you switch between cryptocurrency and stocks, it doesn't feel like jumping between different applications. We are also investing a lot in new businesses, such as credit cards, banking, etc.

AI has absolutely played a role. Our engineers are all using AI, not just for coding but also for reviewing code, and even for brainstorming outside of work hours. An increasing amount of code is released through AI or completed directly by AI; to be honest, this is just the beginning. For us, AI is not just an internal tool; we also use it for customer-facing functionalities. For example, one feature I particularly like is called Cortex: it can generate real-time market dynamic summaries for stocks and cryptocurrencies for users. This saves a lot of time and keeps you updated. In the past, you would have to go to X platform or news site and likely miss information, and by the time you finally understand, the market has already changed.

Host: How do you view the use of mainstream model companies in the U.S.? How do you decide whether to use ready-made open-source models or fine-tune your own? For a resource-rich but prioritization-challenged company, how do you make decisions?

Johan: Prioritization is crucial. We have utilized a lot of existing models and tested different models to see which are best suited for different purposes, as engineers might prefer one model while compliance or marketing teams might prefer another. But we are still in a very early stage. Looking back a year ago, engineers would think, "It's helpful, but not ready yet," while now it has become very powerful, and you can build many tools in just one weekend. For example, we have a crypto API; over the past few weekends, I spent a few hours creating a trading bot with this API. When we consider the impact of this acceleration on the team's efficiency, it’s fascinating because we are still an "America First" company that is starting to expand internationally, and we need to build increasingly personalized and localized functionalities for each country, so having AI tools to assist us in realizing this is crucial.

Host: You are not only building traditional software UI/UX technology but are also developing L2. I feel like you and Coinbase are in an imitation battle, whatever you do, they follow, and vice versa. You came into the crypto market from the traditional stock world, while they are coming from the crypto world trying to provide more markets. Frankly, the ultimate winner is the consumer.

Johan: I completely agree. I believe that the more intense the competition, the better it is for customers, as it lowers costs and sparks innovation. As for whether we are copying, I don’t think so. For example, they launched an NFT market, and we did not. What is most critical for us is to spend time communicating with our own customers, doing user research, and understanding their pain points.

One of the pain points is stock tokenization. We see many people who are unable to access U.S. brokerage accounts due to geographical restrictions unable to reach U.S. stocks and ETFs. There are also settlement issues; T+1 settlement still exists in the U.S., and 24/7 trading hasn't been achieved yet. So we realized we needed technology to solve these; we could use existing L1 or build our own chain. Ultimately, we chose a combination of both—we wanted the decentralization and security of Ethereum, along with liquidity in the EVM ecosystem, so we decided to create an L2. This way, we can customize everything we want, making the Robinhood chain the best RWA chain while enjoying the benefits of Ethereum. We recently launched our testnet with about 45 million transactions, and the most exciting part is seeing developers enthusiastically building on the chain.

Host: Have you seen people using stablecoins to earn rewards or trade?

Johan: There is a lot of use of stablecoins on our platform; we are more like a channel for deposits and withdrawals. People come to Robinhood to buy USDC and then transfer it to their wallets or other platforms; vice versa, people who receive USDC as payment bring it here to convert to cash. Our largest use case also includes using it among institutions, market makers, and liquidity providers because we work with them 24/7; on Saturdays, we can’t wait for the Federal Reserve system to open on Monday, so we settle with stablecoins. In some parts of the world, people even prefer to receive stablecoins rather than cash because they are easier to verify and can be used anywhere.

Host: You currently have about 2000 different stocks, and interestingly, you provide these 2000 stocks on-chain in Europe. What about in the U.S.?

Johan: Not yet. This is due to regulatory and product considerations. In the EU, there is the MiCA regulatory framework, which is a miniature version of the Clarity Act that is being pushed in the U.S. Under that framework, we launched stock tokens, increasing from 200 in June to now 2000, and it’s running great. I believe stablecoins are the first example of tokenization, turning real assets into tokens. There is still a lot of controversy in the U.S., and we frequently meet with regulators to discuss it. Tokenization has tremendous benefits such as immediate settlement and 24/7 trading, and it also makes private equity, real estate, and art more accessible.

Host: For the method of tokenizing assets, some package tokenization through SPVs, while others, like Figure Technologies, create digitized native stocks directly. What is your current approach? Do you have a final goal?

Johan: Our method in the EU system involves a derivative that tracks stock prices while still providing cash dividends and corporate action results. In three to five years, maybe the trend will shift towards direct issuance, but we are still in the initial stages.

Host: You have been deeply involved in the acquisition of Bitstamp; how is the progress currently?

Johan: Bitstamp is performing very well. We have a "crypto-as-a-service" white-label solution that banks are integrating to offer their customers services for buying, holding, and staking cryptocurrencies. With the regulatory environment coming in, this is very encouraging because more and more companies want to offer crypto services; rather than building from scratch, they can directly use our white-label solution. This acquisition has also truly brought us into the institutional business area, which we had not ventured into much before; we primarily focused on retail before.

Host: What specific services do you provide at the institutional level?

Johan: We work with market makers, hedge funds, family offices, and ETF providers to offer them liquidity, as well as white-label services, staking, and other products. And because we have established the largest retail platform in the U.S. with a large amount of non-toxic buy order flow, combining that with Bitstamp is also very beneficial for the exchange's liquidity.

Host: When recruiting teams now, will you reduce hiring because of AI?

Johan: If you look at our careers page, you'll find that we are still hiring a large number of employees. Due to growth at the company-wide level, not limited to the crypto business, and our international expansion, we still need to recruit a lot of talent. For us, AI is just a tool. We provide a lot of training and tool support for older employees who have not grown up with AI. For example, the compliance department can use AI to extract document summaries, saving a lot of reading time. At this stage, AI is just a good way to optimize all workflows and give us time to think about how to achieve our goals.

Host: What are your goals for the next 12 months?

Johan: International expansion is a major focus, and we also want to push our business for advanced traders. For a long time, Robinhood has been seen as a simple place to buy cryptocurrencies, and now we are heavily promoting advanced features. Based on trading volume, you can now buy cryptocurrencies with just 3 basis points, and you can stake, which was not previously possible, and more coins are now listed on the platform.

Host: You mentioned before that you are building L2, but I haven’t heard about building a stablecoin; why?

Johan: In fact, we joined an alliance called the "Global Dollar Network" to issue a stablecoin named USDG. It consists of several companies, including Kraken, OKX, Bullish, etc. We believe stablecoins have become a commodity at this point; there are more than 50 different stablecoins, and our differentiation is not significant. However, what we care about is the revenue generated from stablecoins; we want to distribute the revenue to our customers, whether they are institutions or retail. So we do not want the revenue to be locked by the issuer; the role of the alliance is to distribute the revenue among member companies.

Host: Your platform has an AI advisor feature; will AI replace financial advisors?

Johan: The assistant we launched is mainly linked to your own portfolio, informing you about what is happening in the market or how to think about diversification. It does not strictly provide you with investment advice; rather, it serves as an educational tool rather than an investment tool. Moving forward, regulation needs to be around the impact of AI on financial services.

Host: Is there anything internally that is not often noticed but excites you very much?

Johan: For me, banking is very exciting; we recently launched a suite of products aimed at families. You can create a custodial account for your child. I created one for my son, and you can also generate a link to send to friends and family so they can deposit cash or stocks. This move is not only to prepare for the upcoming massive wealth transfer but also to break the taboo of not discussing money in families, allowing children to be exposed to financial planning and investment education at an early age.

Related reading: Robinhood vs Coinbase: Who is the next 10x stock?

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