The U.S. Securities and Exchange Commission (SEC) has ended its investigation into Robinhood’s cryptocurrency business without recommending enforcement action.
The U.S. Securities and Exchange Commission (SEC) has ended its investigation into Robinhood’s cryptocurrency business without recommending enforcement action. Robinhood received confirmation from the SEC’s Enforcement Division on Feb. 21, and the company disclosed the update on Feb. 24. The investigation began in May 2024 when Robinhood received a Wells notice, signaling that the SEC was considering an enforcement action against its crypto unit.
Robinhood’s chief legal, compliance, and corporate affairs officer, Dan Gallagher, said the investigation should never have been opened. "Robinhood Crypto always has and will always respect federal securities laws and never allowed transactions in securities," he stated. The company had been under scrutiny for nearly a year before the case was closed.
The SEC's decision follows Robinhood’s $45 million settlement in January over separate allegations that it violated more than 10 securities laws. As part of that settlement, Robinhood admitted to certain findings outlined by the regulator. The company has since urged the SEC to move away from enforcement-driven regulation and provide clearer guidance for digital assets.
The SEC's stance on crypto appears to be shifting under the new administration. Since President Donald Trump took office in January, the agency has launched a Crypto Task Force to reform digital asset regulations. The task force, led by SEC Commissioner Hester Peirce, has met with firms like Nasdaq, Multicoin Capital, the Blockchain Association, Jito Labs, and Andreessen Horowitz to discuss industry concerns. Market participants have pushed for clearer rules on exchange-traded products, staking, and other crypto-related activities.
The SEC’s approach to enforcement cases involving major crypto firms may also be changing. Former SEC official John Reed Stark suggested that ongoing cases against Coinbase, Binance, and Ripple could be dropped. He pointed to the SEC’s recent request for a 28-day extension in its lawsuit against Coinbase as a sign that regulatory priorities are shifting. "Expect all crypto-related appeals, including the appeal of the Ripple matter, to pause or even more likely, to be fully withdrawn," Stark said.
Robinhood has benefited from these developments, with strong fourth-quarter earnings driven by increased trading in equities, options, and cryptocurrencies. The company's performance has improved since Trump returned to the White House, which some analysts believe has contributed to renewed investor confidence.
Scott Acheychek, COO of REX Financial, said the SEC’s decision was a positive sign for the industry. "The recent closure of investigations into Robinhood and Coinbase by the SEC is a promising development for the crypto industry. It suggests a shift towards clearer regulatory guidelines, moving away from the previous approach of regulation by enforcement," he said. He added that the decision would likely support Robinhood’s expansion in the crypto market.
The SEC has also closed its investigation into NFT platform OpenSea, and its case against Coinbase may be nearing a similar resolution. Gallagher welcomed the decision, saying, "Any case against Robinhood Crypto would have failed. We appreciate the formal closing of this investigation and a return to the rule of law and commitment to fairness at the SEC."
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