Robinhood, a leading brokerage firm, is reassessing its cryptocurrency offerings following recent actions taken by the Securities and Exchange Commission (SEC) against two prominent digital asset trading platforms.
The company’s legal chief and former SEC commissioner, Dan Gallagher, informed Congress that Robinhood is reviewing the regulator’s analysis to determine any necessary actions.
This move comes as the SEC filed lawsuits against Binance and Coinbase, accusing them of various violations, including operating as unregistered exchanges and offering unregistered securities.
Currently, Robinhood provides users access to a relatively limited selection of 18 different tokens compared to its competitors like Coinbase, which offers hundreds.
However, some of the tokens available on Robinhood, such as Solana, Cardano, and Polygon, have been classified by the SEC as unregistered securities.
This classification has prompted Robinhood to review its crypto offerings and ensure compliance with regulatory requirements.
Robinhood initially introduced Bitcoin and Ethereum trading to users in a few select states in February 2018. Since then, the company has expanded its crypto offerings significantly, even including meme coins like Dogecoin and Shiba Inu. In the first quarter of this year, Robinhood generated $38 million in crypto trading revenue, representing a 29.6% decline from the same period in 2022.
The SEC has recently filed lawsuits against Binance, the world’s largest cryptocurrency exchange, and Coinbase, the largest US-based cryptocurrency platform.
Binance and its US affiliates face charges for operating as an unregistered exchange and offering unregistered securities.
Similar charges were levied against Coinbase for operating as an exchange, broker, or clearing agency without the necessary registrations. The SEC also accused Coinbase of conducting unregistered securities sales related to its staking-as-a-service program.
Unregistered Securities and Crypto Companies:
In both cases, the SEC highlighted the listing of numerous tokens as unregistered securities, including popular cryptocurrencies like Binance’s BNB, Solana’s SOL, Cardano’s ADA, and Polygon’s MATIC, among others.
These actions against Binance and Coinbase are part of the SEC’s broader enforcement efforts targeting major crypto companies, including Kraken, Bittrex, and Nexo.
SEC Chair Gary Gensler emphasized the need for crypto firms to comply with securities laws during an interview with CNBC Squawk Box.
He noted that conversations with Coinbase had taken place prior to filing the complaint and highlighted the industry’s business model built on noncompliance, comparing it to a game of “catch us if you can.”