SEC Closes Investigation into Robinhood Crypto Without Enforcement Actions
The Securities and Exchange Commission (SEC) has decided to conclude its investigation into Robinhood Crypto (RHC) without pursuing any enforcement actions. This decision reflects the Commission’s shift away from its former “regulation by enforcement” strategy, aligning with the current administration’s more industry-friendly approach.
SEC Wraps Up Probe into Robinhood Crypto
On a notable Monday, Robinhood shared that the US SEC’s Enforcement Division ended its 9-month scrutiny of its crypto division, leaving no enforcement measures in place. Back in May 2024, the Commission had issued a Wells Notice to Robinhood, suggesting an impending enforcement action due to alleged securities law violations involving its US crypto operations. However, on February 21, the regulatory body sent an official letter to RHC, confirming the investigation’s closure and stating that it would not proceed with any enforcement action.
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Robinhood’s Chief Legal, Compliance, and Corporate Affairs Officer, Dan Gallagher, expressed relief, stating that the investigation should never have commenced. He praised the SEC’s decision to close the probe without actions being taken. Gallagher affirmed Robinhood Crypto’s adherence to federal securities laws, emphasizing that it has never permitted transactions in securities, and any legal case against the crypto arm would have been unfounded. “We’re pleased to witness a return to the rule of law and a commitment to fairness at the SEC,” Gallagher concluded.
In a social media statement, Robinhood’s CEO and co-founder Vladimir Tenev hailed the outcome as a triumph for justice and the rule of law. He called for the creation of pro-innovation policies that would unlock the full potential of digital assets in the United States.
Transitioning to ‘Regulation by Regulation’
Robinhood highlighted its crypto division’s compliance with SEC standards, despite differing views on the regulatory classification of digital asset transactions. While Robinhood has historically disagreed with the notion that most digital asset transactions fall under federal securities laws, RHC has taken a cautious approach by refraining from offering particular products and services that the SEC, under former Chair Gensler, publicly claimed were securities.
The company urged the SEC to evolve from its “regulation by enforcement” methodology to a more structured “regulation by regulation” approach. This would provide market participants with the necessary clarity and a suitable regulatory framework for digital assets.
This development comes on the heels of the SEC’s recent decision to dismiss its lawsuit against Coinbase. As per Bitcoinist, the exchange disclosed the settlement of its 20-month-long legal confrontation after the Commission announced its intention to withdraw the case. In 2023, the SEC had accused Coinbase of operating as an unregistered securities exchange and broker-dealer, and of selling unregistered securities via its staking program. However, the agency’s staff tentatively agreed to drop the lawsuit, pending formal approval from the SEC’s Commissioners. Additionally, the SEC and Binance have paused their legal battle for two months, awaiting further actions from the SEC’s Crypto Task Force, which could potentially resolve this and other crypto-related cases.
Furthermore, the regulatory body has introduced the Cyber and Emerging Technologies Unit (CETU), aiming to safeguard investors and address misconduct associated with the realms of cryptocurrency and artificial intelligence.
The overall cryptocurrency market capitalization currently stands at $3.04 trillion, according to data from TradingView.
