Novogratz’s Galaxy Digital launches retail app to rival Robinhood

Galaxy Digital shares jumped 7% Monday after the digital assets investment firm led by CEO Mike Novogratz unveiled a Robinhood-like trading platform, called GalaxyOne.

The platform, which launched Monday, hosts commission-free buying and selling of more than 2,000 stocks and exchange-traded funds, in addition to trading of cryptocurrencies such as bitcoin and ether, Galaxy Digital said in a statement.

GalaxyOne also offers several yield-bearing accounts, including a 4% annual percentage yield on cash deposits and an 8% yield investment note for accredited investors who put up a minimum of $25,000, the company said.

Galaxy shares have more than doubled this year as federal regulators have softened their oversight of digital assets.

The trading platform’s launch comes as cryptocurrencies and their underlying blockchains appear poised to disrupt the traditional financial system, Novogratz said Monday on CNBC’s “Squawk Box.”

“You’re going to see stablecoins take money out of bank deposits … then, you’re going to see credit be replaced,” Novogratz said. “In time, that will happen.”

In that ever-changing environment, GalaxyOne aims to serve as a one-stop shop for retail investors looking to trade a wider range of traditional and digital assets than those available through existing brokerages, he added.

“You got a bank account, and you gotta shift that money somewhere else to buy stocks. You got a brokerage account, [but] to buy crypto, you gotta go somewhere else,” Novogratz said. “We think all of that’s gonna aggregate in one place.”

Cantor Fitzgerald said Monday in a note to clients that Galaxy’s foray into retail-focused services reflects its desire to compete against one-stop financial services applications, including Robinhood and eToro.

“GLXY, which has historically only served institutional clients, is expanding its reach for the first time,” Cantor analyst Brett Knoblauch said in the note. “This product, in our mind, will look to compete with HOOD (OW) and ETOR (OW).”

The firm has a buy rating on Galaxy’s stock, and it has set a $45 price target on shares. That implies upside of 24% from Friday’s close.

Asked whether Galaxy’s trading platform plans to target Robinhood and its rivals’ users, GalaxyOne managing director Zac Prince said Monday in an interview with CNBC: “We’re not thinking of the app as something that is trying to take Robin Hood head on today. We are actually aiming to target a very specific type of customer profile currently, which is the affluent accredited investor … in the U.S.”

Nevertheless, Prince acknowledged that GalaxyOne is entering a crowded market. “In a sense, we are competing with everyone who has a consumer-facing financial app, whether it’s [decentralized or centralized] finance or traditional FinTech, and we’re competing for mindshare and attention.”

A growing number of traders have flocked to crypto in recent months, largely due to a broader bull run that has propelled several digital assets’ prices to record highs this year.

Bitcoin rallied to a new all-time-high price of roughly $125,800 on Monday, shortly after surpassing the $125,000 mark for the first time last weekend.