Robinhood embraces copy trading after warning competitors about regulatory risks

What a difference a changing regulatory environment makes.

Roughly nine months after suggesting that a young copy trading platform could only operate because it flew “under the radar” of regulators, Robinhood has announced its own entry into the space with “Robinhood Social,” a new feature that will allow users to follow and manually replicate the trades of prominent investors.

The move represents a striking about-face for the online brokerage, which has historically been cautious about features that could attract regulatory scrutiny. The company famously ditched its celebratory digital confetti feature ahead of its 2021 IPO after regulators raised concerns about gamifying trading, making its embrace of copy trading, another potentially gamified feature, all the more notable.

This wariness was on full display in December, when in a conversation with this editor about upstart copy trading platform Dub, Robinhood CEO Vlad Tenev suggested that such platforms could operate primarily because of their smaller size, proposing that “copy trading could become of greater interest to regulators” and that Dub may not yet be under the “magnifying glass” because of its “comparatively smaller size.”

Now, Robinhood is betting that the regulatory landscape has changed enough to safely enter the copy trading market.

The timing is particularly notable given the pointed criticism Robinhood faced earlier this year from Dub’s 23-year-old founder Steven Wang, who has positioned his platform as a more educationally-focused alternative to traditional trading apps.

“I have a lot of respect for what [CEO] Vlad [Tenev] has done in making trading free,” Wang told me back in February. “But at the end of the day, making it super easy to trade without expert guidance, without education, is really just gambling for the broader population.”

Wang has consistently argued that Dub’s approach – which includes risk scores, risk-adjusted returns, and portfolio stability metrics – represents a safer alternative to platforms like Robinhood. In his conversation with TechCrunch, Wang was also critical of Robinhood’s decision to offer meme coins like TRUMP, saying the incentives are “misaligned between these big platforms that are public companies now that need to make money.”

Tuesday’s news, announced at Robinhood’s company event earlier in the day, brought to mind the possibility that Robinhood had, in fact, acquired four-year-old Dub, which officially launched just last year and has so far raised $47 million in funding from investors. But reached for comment, a Robinhood spokesperson responded via email, “No, this is not an acquisition, we are building our own platform in Robinhood.” A request for comment from Wang was not returned by press time.

Robinhood’s version of copy trading differs meaningfully from platforms like Dub and established players like eToro, which has offered copy trading to U.S. users for years through its CopyTrader feature. While eToro allows automatic copying of other traders’ portfolios in real-time (with U.S. users limited to copying only other U.S. traders due to regulations), Dub allows users to automatically copy entire portfolios for a $10 monthly subscription, and Robinhood Social will require users to manually replicate trades, a distinction that may help address regulatory concerns.

The platform, set to launch early next year, will feature verified traders and display the activities of famous investors and members of Congress. Unlike the informal copy trading that happens on social media, Robinhood will require identity verification and proof of actual portfolio positions. The plan, according to the company, is to first invite 10,000 Robinhood Social users to test out the service before rolling it out more widely.

The launch comes at a time when the regulatory landscape is fast evolving. Crypto companies were scrutinized heavily under the Biden administration, while numerous crypto companies have become publicly traded companies in recent months, their path eased by the Trump administration’s crypto-friendly stance. Meanwhile, copy trading – long common in Europe but heavily restricted in the U.S. – may be gaining acceptance finally.

Seen through that lense, Robinhood’s entry into copy trading represents more than just another feature launch; it could signal the opening of floodgates for a wave of new platforms. If Robinhood can successfully negotiate the legal landscape that has long limited copy trading in the U.S., other fintech outfits seem likely to follow suit. eToro’s successful May IPO, which raised $310 million and saw shares surge 29% on their debut, has already demonstrated strong investor appetite for copy trading platforms.

Whether this potential wave is good news or bad for retail investors – or it will mostly serve to boost fintech valuations – is an open question. For right now, Robinhood’s shareholders are probably the clearest winners.