By Jen Wieczner
June 22, 2018

Robinhood is giving old-fashioned stock brokers a run for their money by offering no-fee trading on everything from Apple stock to Bitcoin—but that doesn’t mean the startup itself necessarily makes money.

Currently worth $5.6 billion, Robinhood is the second most valuable private fintech company and boasts more than 4 million customer accounts, edging out its older rival E*Trade, which had 3.9 million at the end of May. It helped that Robinhood launched cryptocurrency trading in February: More than 200,000 new customers per day signed up during a surge following the launch of Robinhood Crypto, the company’s co-CEO, Vlad Tenev, tells Fortune.

Yet unlike zero-commission stock trading, which can still be profitable, Robinhood is basically giving crypto trading away for free.

“We don’t intend to make very much money on it at all for the foreseeable future,” Tenev says on the latest episode of “Balancing the Ledger,” Fortune’s weekly show about cryptocurrency and fintech. “We intend to operate it as a breakeven business.”

That’s not so different from the experience of Square, the payments company founded by Twitter CEO Jack Dorsey, which began offering no-fee Bitcoin trading through its Cash app earlier this year. Last month, Square reported it made just $223,000 more selling the Bitcoin than it paid to buy it over the first quarter of sales.

With a dearth of market makers in the nascent cryptocurrency industry, Square and other trading platforms like Robinhood typically buy their Bitcoins and cryptocurrencies straight from public crypto exchanges and then resell them to investors, hoping to profit on the spread, or difference, between the purchase and sale price. But that can be tricky, especially when cryptocurrency’s high volatility results in frequent price swings.

That doesn’t matter to Tenev and his co-CEO Baiju Bhatt, who see cryptocurrency—Robinhood currently offers trading in both Bitcoin and Ethereum—as an entree for newbies into trading other more traditional assets on which it reaps higher margins.

“The thinking behind that is what we’re really doing is building an ecosystem,” Tenev says. “Right now the products are investing products, so crypto slots in very nicely alongside the 10,000 plus other instruments that people can trade.”

Robinhood’s stock business is more lucrative, as it makes money by lending shares out to short-sellers (investors who seek to make money when stock prices decline), charging the borrowers for the privilege. The company also collects interest on cash deposits, and offers a premium subscription service Robinhood Gold with more advanced functions such as margin trading.

Tenev believes commission fees are a relic of the past, left over from the days before electronic trading existed, and no longer have a place in the modern world where a typical brokerage’s main expenses are down to operating and maintaining its data centers, networks and infrastructure—a drop in the bucket compared to the $5 to $10 many charge per trade.

“The cost has gone to essentially zero,” Tenev says. “So our approach is use technology and automation to put the vast majority of the value of that transaction back into customers’ pockets.”

In the future, Robinhood hopes to expand that philosophy beyond just its current structure as a broker-dealer, and ideally offer everything Bank of America currently provides—and more, Tenev says.

“I think it doesn’t stop with just investing products,” he says. “Customers are getting ripped off across the board in financial services.”

That includes cryptocurrency, he adds. Robinhood already tracks prices and market data for 16 different virtual currencies including Litecoin, Ripple and Zcash, and may soon allow trading in them too.

“We’re definitely looking to expand the future set and add more coins,” Tenev says. The company is proceeding cautiously, though, taking into account regulators’ guidance about whether certain cryptocurrencies may constitute illegal securities or not.

Robinhood is also looking carefully at factors such as, “What’s the team behind this coin doing? Are they legitimate, what are their backgrounds?” says Tenev, adding the company also takes account of a cryptocurrencies’ stability and resistance to hacks. “Like 51% attacks for instance, which we know happened to Bitcoin Gold a couple of weeks ago,” Tenev adds. “That was very eye-opening.”

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