US SEC targets Robinhood in crypto probe
Meanwhile, Robinhood Wallet is now available to iOS users.
The US Securities and Exchange Commission's crackdown on crypto has spilt over into 2023. This time, online trading app Robinhood is being targeted by the securities regulator over its crypto trading business. According to a recent filing, the SEC subpoenaed Robinhood in December.
The timing is surely no coincidence and comes after cracks in the crypto space began to emerge in 2022, chief among which was the failure of cryptocurrency exchange FTX in November. At the top of the SEC's list is whether tokens that are supported on platforms like Robinhood are securities. Robinhood outlined in its filing that the regulator wants to know more about its:
Support of cryptocurrencies
Earlier this year, US-based crypto exchange Kraken settled with the SEC over failing to register crypto assets that were offered as part of a staking program, a popular activity in the decentralized finance (DeFi) world. A similar outcome for Robinhood "could prevent us from continuing to facilitate trading of those cryptocurrencies (including ceasing support for such cryptocurrencies on our platform," the filing states.
In a one-two punch, Robinhood also received subpoenas from the California Attorney General’s Office covering several fronts including custody of customer assets and coin listings. Robinhood says it’s cooperating with the probe.
Robinhood holds $8.4bn in crypto assets for investors, mostly across Dogecoin, Ethereum and bitcoin. In addition, crypto generated $3.7bn in notional trading volumes (which fuel transaction revenues) in January, a 95 per cent increase vs. December.
The regulatory spotlight doesn’t appear to be throwing a wrench into Robinhood’s crypto plans.
This week, Robinhood announced it has expanded the availability of its self-custody crypto wallet to iOS users. With more than 1 million users on the waitlist, Robinhood Wallet is now supporting both the Polygon and Ethereum blockchains. The company said in a blog post:
“While we recognize it’s been a tumultuous few months in the crypto space, we remain committed to our mission to make Robinhood the most trusted, lowest cost, and easiest to use on-ramp to crypto.”
Meanwhile, the SEC is lurking in the shadows, hunting securities assets and decentralized finance (DeFi) activities that it doesn’t like.
Brian Armstrong, chief executive of leading U.S. crypto exchange Coinbase, told Bloomberg this week that his No. 1 priority in 2023 is the regulatory environment, which he says must get to a “good place in the U.S.” According to him, the industry needs a “clear rulebook” so that the innovation doesn’t continue to go overseas. Major traditional financial institutions including the likes of Visa, Mastercard and JPMorgan are all looking for ways to build crypto into their services, he noted.
HOOD shares are down slightly so far in March to below the $10 level.