SEC Drops Investigation Into Robinhood's Crypto Unit

The U.S. Securities and Exchange Commission has officially ended its investigation into Robinhood's HOOD cryptocurrency operations without imposing any enforcement action, the company announced on Monday.

This development signals a potential shift in regulatory oversight following a period of heightened scrutiny on digital asset firms.

What Happened: Robinhood stated that the SEC's Enforcement Division sent a letter on Friday, confirming the conclusion of its inquiry.

The investigation, which began in May 2024, focused on Robinhood's crypto services, including asset listings, custody practices, and trading operations.

At the time, the SEC had warned that the company could face charges over potential securities law violations.

Despite regulatory pressure, Robinhood maintained that it consistently worked with authorities to ensure compliance.

“Robinhood Crypto has always operated within federal securities laws and has never facilitated securities transactions,” said Dan Gallagher, the company's chief legal and compliance officer. “We welcome the SEC's decision and a return to regulatory fairness.”

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Why It Matters: The SEC's decision to close its investigation into Robinhood follows a similar move last week when it dropped an enforcement case against Coinbase Inc. COIN.

These actions suggest a potential regulatory shift that aligns with President Donald Trump's previously stated plans to support the crypto sector.

Many in the industry had criticized the SEC's enforcement-first approach under former chair Gary Gensler, arguing that it created uncertainty rather than providing clear regulations.

With the recent dismissals, expectations are rising that crypto firms may now operate with greater legal clarity.

Robinhood's crypto division has played a significant role in its overall business growth.

In the fourth quarter, nearly half of the company's $672 million transaction-based revenue came from cryptocurrency trading, which saw a 700% increase as Bitcoin BTC/USD surged toward $100,000.

Investor sentiment toward Robinhood remains positive, with the company's stock rising more than 1% in premarket trading.

Year-to-date, Robinhood shares have climbed 38%, reflecting growing confidence in a regulatory environment that could be more favorable to digital assets.

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