Robinhood announced yesterday (24 February) that the US Securities and Exchange Commission (SEC) has closed an investigation into its crypto business.
In May last year, the trading platform’s crypto operation, Robinhood Crypto, was issued a Wells Notice, a notification of impending enforcement action following the US markets regulator’s conclusion of an investigation.
However, just under a year after the Wells Notice was issued, the SEC has now opted to close the case. This comes just a month after Robinhood reached a $45m settlement with the SEC following an investigation into the company’s Robinhood Securities division.
The SEC’s investigation into Robinhood Crypto was unrelated to the probe and subsequent settlement concerning Robinhood Securities. However, it will of course still come as a relief to the company, which is now secure in the knowledge that another financial penalty is not heading its way.
“We applaud the staff’s decision to close this investigation with no action,” said Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer at Robinhood Markets.
“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 allow 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 urges change in regulatory relations
There are some regulatory winds of change going on in the US right now, the SEC has found itself at the heart of this alongside other notable bureaus such as the Commodity Futures Trading Commission (CFTC) and Consumer Finance Protection Bureau (CFPB).
These winds of change are particularly affecting the crypto sector. US President Donald Trump’s wide-ranging political agenda includes several pro-crypto policies. The outspoken politician is also notable for favouring a more relaxed regulatory approach across multiple sectors, including crypto.
Some regulators are also finding themselves falling under the crosshairs of Trump and more significantly Elon Musk’s efforts to reduce US federal spending, the latter doing so as head of the newly created Department of Government Efficiency (DOGE).
Since Trump’s inauguration, DOGE has turned its attention to the CFPB, which told all staff to cease activity earlier this year, prompting a legal challenge by some employees. There are also hints that it will soon turn its attention to the SEC.
Robinhood has not commented on any of these actions, but the firm has stated that following the closure of the SEC investigation it will ‘look forward to working with the SEC under this new administration to establish a clear path forward’.
The company also stressed its long-held disagreement with the idea that digital asset transactions should be subject to federal securities laws, adding that it had ‘made difficult choices not to provide certain products and services’ that were regarded as securities in public actions by Gary Gensler, the former Chair of the SEC.
Gensler is a figure who long found himself at odds with the US crypto sector. Many stakeholders viewed him as over-regulating the sector and being conformational, while Gensler often argued that he was seeking to counter instances of fraud, money laundering and other forms of criminality in crypto.
During his election campaign, Trump often asserted that he would replace Gensler as SEC Chair once coming into office, with the politician garnering a lot of support from US crypto holders and companies.
Gensler ultimately announced his intention to resign from the SEC in November 2024, shortly after Trump’s election victory, and he vacated the role after the formal end of the Biden administration and the start of the Trump administration in January 2025.
Robinhood’s statement on crypto regulation concluded: “Instead of regulation by enforcement, it’s time for the SEC to turn to regulation by regulation – providing market participants with clarity and an appropriate regulatory framework for digital assets.
“And as for Robinhood, we’ll continue on as we’ve always done: innovating with products and services for our customers.”
