Robinhood Markets announced that the Securities and Exchange Commission has officially dropped an investigation into its crypto operations. This recent development marks a significant step towards the potential easing of regulations within the digital currency industry. The trading platform revealed that it received a notification from the SEC on Friday, indicating that the regulator will not pursue any enforcement actions against Robinhood's cryptocurrency business.
A spokesperson from the SEC chose not to comment on this matter. In a statement, Dan Gallagher, Robinhood's chief legal, compliance, and corporate affairs officer, expressed his satisfaction with the decision, stating, 'We applaud the staff's decision to close this investigation with no action. Let me be crystal clear -- this investigation never should have been opened.' These words reflect the company's strong belief in its compliance with federal regulations.
This positive news comes on the heels of a similar announcement from cryptocurrency trading platform Coinbase, which also reported that the SEC agreed to dismiss an enforcement case against it. However, despite this optimistic news, shares of both Robinhood and Coinbase saw a decline of 4% in trading on Monday.
According to a note from Oppenheimer, the dismissal of the SEC's lawsuit against Coinbase is likely an indication that the era of 'regulation by enforcement,' which has been a significant concern in the crypto space, may be coming to an end. Oppenheimer noted that this new regulatory environment could prove advantageous not just for Coinbase, but for the entire cryptocurrency industry.
In May 2024, Robinhood had received a notification that the SEC was considering recommending an enforcement action against the company, citing potential violations of the Securities Exchange Act of 1934. Gallagher reiterated the company's commitment to adhering to federal securities laws, stating, 'Robinhood Crypto always has and will always respect federal securities laws and never allowed transactions in securities.
As we explained to the SEC, any case against Robinhood Crypto would have failed.' Earlier this month, Robinhood reported a substantial increase in cryptocurrency revenue, which soared over 700% year-over-year to an impressive $358 million for the fourth quarter. Additionally, crypto notional volumes spiked more than 400%.
This remarkable growth indicates a significant demand for cryptocurrency trading services provided by Robinhood..