Robinhood Markets, Inc. (NASDAQ:HOOD) announced that it had received a Wells Notice from the US Securities and Exchange Commission (SEC) staff.
As reported on May 6, 2024, Robinhood Crypto (RHC) received a Wells Noticer “indicating [staff] will recommend that the Commission file an enforcement action.”
Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer Robinhood Markets, Inc., said:
“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business. We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.”
Gallagher is a former SEC Commissioner.
Robinhood Crypto has made difficult choices “not to list certain tokens or provide products, such as lending and staking, that the SEC previously alleged are securities in public actions against other platforms.”
Moreover, Robinhood heeded the SEC’s calls and attempted “to register a special purpose broker-dealer with the agency.”
More on these efforts here.
You may review the filed form 8-K here.
The company clarified to their customers that this development will “not affect your account or the services they provide,” the company clarified.
Robinhood Crypto also mentioned that they are “here to stay, and they’ll keep innovating, shipping products, and fighting for regulatory clarity for the good of the industry and their customers.”
During the past few years, the SEC has provided very limited guidance regarding helping firms providing services focused on crypto-assets. Robinhood’s concerns about the SEC’s “regulation by enforcement” approach are not unique to them. Many other crypto-focused firms, such as Ripple Labs and even Coinbase, have expressed serious concerns regarding the SEC’s stance on crypto trading and investing.
Over the years, the SEC has tried to apply outdated rules to crypto, and the regulator has also been quick to file lawsuits instead of being helpful and offering clear guidance and feedback. The courts have stepped in many times to address these issues, and it seems like this is how the SEC will be dealing with crypto-related businesses (for now, at least).
