In the wake of recent regulatory actions in the United States, Robinhood, a popular trading platform, is re-evaluating its cryptocurrency offering. The decision follows the Securities and Exchange Commission (SEC) crackdown on Binance and Coinbase exchanges.
The SEC, earlier this week, initiated a severe crackdown against these two cryptocurrency exchange giants, taking Robinhood's Chief Legal Officer, Dan Gallagher, to testify before the US Congress on Tuesday, June 6, 2023. Gallagher clarified Robinhood's position regarding cryptocurrency offerings on the platform, particularly in the context of the SEC's lawsuit against the main exchanges.
Among the cryptocurrencies listed on Robinhood, 18 in total, some are being scrutinized for possible delisting as the SEC has classified them as unregistered securities. Among them, Solana (SOL), Polígono (MATIC) and Cardano (ADA) are in the spotlight.
However, it is important to note that Robinhood has a brokerage license that allows you to trade securities. Despite this, Gallagher, a former SEC commissioner, has expressed his uncertainty as to whether this license would allow safe trading of cryptocurrencies mentioned in SEC filings.
So far, no cryptocurrency has been deleted from the platform. However, if Robinhood decides that continuing to offer these tokens could lead to potential legal action, they are likely to be removed.
What would that mean for Robinhood? The company's revenue, generated through offering cryptocurrencies, is a small but significant portion of its total revenue. In the first quarter of 2023, Robinhood reported total net income of $441 million, of which crypto income accounted for less than 10%, totaling $38 million.
Given the situation, Robinhood is conducting a thorough review of the situation to determine next steps, as a removal of listed cryptocurrencies could impact its revenues, even on a small scale. But more importantly, the company has few options when it comes to geographic diversification, as it exclusively serves US customers.
