During the Biden Administration, digital assets were regulated by enforcement as the Securities and Exchange Commission (SEC) refused to provide regulatory clarity for firms engaged in the trading and issuance of crypto. In effect, the SEC told platforms and issuers to come in and register but then denied a path to do so.
Today, another one of the SEC’s flawed investigations has been shuttered. Robinhood Crypto shares that the SEC Enforcement Division has decided not to pursue an enforcement action and will take no action providing a reprieve for the beleaguered trading platform.
Former SEC Commissioner Dan Gallagher, now the Chief Legal, Compliance and Corporate Affairs Officer at Robinhood, issued a statement on the SEC’s staff decision welcoming the turn of events.
“Let me be crystal clear—this investigation never should have been opened. Robinhood Crypto always has and will always respect federal securities laws and never allowed transactions in securities. As we explained to the SEC, any case against Robinhood Crypto would have failed. We appreciate the formal closing of this investigation, and we are happy to see a return to the rule of law and commitment to fairness at the SEC.”
Robinhood received a Wells Notice in May of 2024. A Wells Notice is an indication that SEC staff is recommending an enforcement action against an entity. At that time, Gallagher stated:
“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.”
Robinhood said that while they believe that most digital assets are not securities, they chose not to offer certain products to US clients. Apparently, this decision may soon be reversed.
Like Coinbase, which was also the target of an action by the SEC, Robinhood is now able to work with regulators to help craft rules that ensure investor protection and clarity of regulation, thus enabling digital asset innovation to proceed.
