Regulatory Scrutiny Concludes with No Penalty
The U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into Robinhood Crypto without taking any enforcement action, the company confirmed in a statement.
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Robinhood revealed that the SEC’s Enforcement Division had concluded its inquiry and decided not to proceed with charges, despite issuing a Wells Notice in May 2024, signaling a potential enforcement action at the time.
Robinhood Calls for Clearer Crypto Regulations
Dan Gallagher, Robinhood Markets’ head of legal and compliance, criticized the investigation, asserting that it “should never have been opened” and that Robinhood never facilitated securities transactions.
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The company further urged the SEC to abandon its “regulation by enforcement” approach and instead provide a transparent regulatory framework for digital assets. Gallagher, once rumored as a potential replacement for former SEC Chair Gary Gensler, had previously dismissed any interest in the role.
A Shift in SEC’s Crypto Stance Under New Leadership
The SEC’s decision to drop the Robinhood case follows similar recent developments in the industry. Just last Friday, the regulator ended its investigation into OpenSea, and earlier in the day, it reached a settlement with Coinbase, dropping major charges against the crypto exchange.
Since the inauguration of President Donald Trump, the SEC has signaled a more favorable stance toward digital assets, launching a crypto-focused task force under Commissioner Hester Peirce and rescinding the controversial Staff Accounting Bulletin (SAB) No. 121, which had complicated compliance for crypto platforms.
The decision to close the Robinhood probe aligns with Trump’s campaign pledge to shift away from the enforcement-heavy strategy that defined Gensler’s tenure.
Market Reaction and Robinhood’s Growing Crypto Revenue
Following the news, Robinhood shares saw a modest 2.4% gain in premarket trading, per Yahoo Finance, after closing the previous session down 7.9%.
Crypto has become an increasingly vital revenue stream for Robinhood, with nearly half of its $672 million transaction-based revenue in Q4 2024 originating from crypto trading—a staggering 700% year-over-year increase, fueled in part by Bitcoin’s surge past $100,000 in response to Trump’s electoral victory.
With the SEC’s regulatory grip loosening, Robinhood and other crypto platforms may find a more favorable operating environment in the months ahead.
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