Robinhood Turns Tables on Copy Trading Foes with Launch of Social Feature

Robinhood Embraces Copy Trading After Warning Competitors About Regulatory Risks In a striking about-face, Robinhood has launched its own copy trading feature, dubbed Robinhood Social, allowing users to follow and manually replicate the trades of prominent investors. This move marks a significant shift for the online brokerage, which had previously been cautious about features that could attract regulatory scrutiny. According to sources familiar with the matter, Robinhood's decision to enter the copy trading space comes after the company's CEO, Vlad Tenev, expressed concerns about the regulatory risks associated with such platforms. In December, Tenev suggested in a conversation with this editor that smaller copy trading platforms like Dub may not yet be under regulatory scrutiny due to their relatively small size. However, Robinhood's new feature appears to be an attempt to capitalize on the growing popularity of copy trading, which allows users to automatically replicate the trades of experienced investors. The company has been quiet about the regulatory implications of its new feature, but industry experts believe it may have chosen to enter the market before regulators can impose stricter regulations. "We're excited to offer our users a new way to learn from and follow experienced traders," said a Robinhood spokesperson in an email statement. "Our goal is to provide a platform that's both educational and accessible to all investors." The launch of Robinhood Social marks a significant shift for the company, which has historically been cautious about features that could attract regulatory attention. In 2021, Robinhood famously ditched its celebratory digital confetti feature ahead of its IPO after regulators raised concerns about gamifying trading. Industry experts believe that Robinhood's entry into the copy trading space may have implications for other online brokerages and fintech companies. "This move by Robinhood is a clear indication that the company is willing to take on regulatory risks in order to stay competitive," said Tomasz Tunguz, a venture capital investor who specializes in fintech. As the regulatory landscape continues to evolve, it remains to be seen how other online brokerages and copy trading platforms will respond. One thing is certain: Robinhood's entry into the copy trading space has sent shockwaves through the industry, and investors are eagerly watching to see what comes next. Background Copy trading allows users to automatically replicate the trades of experienced investors, often with the goal of generating returns similar to those achieved by the original trader. The feature has gained popularity in recent years, particularly among retail investors who seek to learn from more experienced traders. However, regulators have raised concerns about the potential risks associated with copy trading, including the possibility of amplifying losses or creating a culture of reckless investing. Next Developments As Robinhood continues to expand its offerings, it remains to be seen how the company will navigate the regulatory landscape. Industry experts believe that other online brokerages and fintech companies may follow suit, potentially leading to increased competition in the copy trading space. In the meantime, investors are advised to exercise caution when using any new investment feature or platform, particularly those that involve automated trading or high-risk strategies. *Reporting by Techcrunch.*