Robinhood Cites Regulatory Actions or Policies Towards Crypto as Business Risk in Filing

The firm said crypto trades made up a 41% share of its revenue in the Q2, and it was a “record period” for crypto trading on Robinhood but warned that level “may not occur in the future.”


Robinhood has listed regulatory intervention in cryptocurrency trading as a risk to its business in an amended filing this week where it seeks to speed up approval for shareholder stock sale.

The California-based brokerage pointed to US Securities and Exchange Commission (SEC) Chair Gary Gensler’s comments on evaluating digital currency markets and reviewing the payment for order flow system — an arrangement between trading firms and brokerages, in its filing.

Payment for order flow on stock and options trades that could also come under fire by the SEC is another critical stream of the company's revenue.

“The regulatory landscape involving cryptocurrencies is constantly evolving and is subject to change,” Robinhood said in the filing.

The company went on to say that future regulatory actions or policies may even limit or restrict cryptocurrency usage, custody, or trading. This affects the company's ability to add new crypto to its platform and maintain the ones currently supported on the platform.

“Any such future regulatory actions or policies may reduce the demand for cryptocurrency trading and may materially decrease our revenue derived from Transaction Rebates in absolute terms and as a proportion of our total revenues, which could adversely affect our business, financial condition and results of operations.”

According to Robinhood, securities and commodities laws and regulations, which may be “subject to challenge,” can apply to certain cryptocurrency businesses.

The firm also noted that crypto trades made up a 41% share of its revenue in the second quarter, and it was a “record period” for crypto trading on Robinhood. “That level of trading activity may not occur in the future,” it added.

Growing Adoption

The original meme coin Dogecoin, in particular, accounts for the majority of Robinhood’s crypto trades. Now, the enthusiasts of another dog coin called the Shiba Inu coin (SHIB) are also urging the company to list the token. A petition on Change.org calling the trading app to add the cryptocurrency on its platform has surpassed 200,000 signatures.

In the first half of this week, the SHIB coin surged about 325% in value to $0.000035 and is currently trading at $0.00002663.

The petition said Dogecoin's addition to Robinhood has been a success, and with Shiba Inu being a “similar meme coin with genuine potential,” it would be a good addition too. The coin is already available on some of the top exchanges, including Binance, Coinbase, and Huobi.

“Let's encourage Robinhood to be the first traditional brokerage to get on this train,” reads the petition.

In the meantime, Robinhood competition Public.com will soon allow its users to trade crypto as well. Trading app Public.com is planning to gradually offer trading in Bitcoin, Ether, Cardano, Dogecoin, Litecoin, Bitcoin Cash, Stellar, Ethereum Classic, Dash, and Zcash, over the next several weeks, the company said in a statement.

Apex Crypto will provide execution and custody services for the company's crypto-trading feature. New Yorkers won’t be able to trade digital assets in the app though until Apex Crypto obtains its BitLicense in the state.

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