Robinhood, a well-known trading platform, has recently received a Wells notice from the United States Securities and Exchange Commission (SEC) for its U.S.-based crypto business. The news caused a 2.5% decrease in Robinhood’s share price during pre-market trading, bringing it down to $17.95. The SEC’s investigation comes after Robinhood had tried to register with the agency as mentioned by Dan Gallagher, the company’s chief legal, compliance, and corporate affairs officer.
Gallagher expressed disappointment with the SEC’s decision despite Robinhood’s efforts to work with them for regulatory clarity including trying to register. He stated that even though they do not consider their listed assets to be securities, they are still saddened by the issuance of the Wells Notice relating to their U.S crypto business. According to Gallagher, lack of federal regulatory clarity in the crypto space has created challenges for compliance and hindered mainstream adoption of cryptocurrencies as he pointed out during his court testimony on June 6th.
During his testimony, Gallagher compared the regulatory landscape for digital assets to that of equities markets in 1932 while emphasizing the fragmented state regulatory frameworks and absence of clear federal guidelines from SEC and CFTC regarding digital assets classification as either securities or commodities. Despite this hurdle, Robinhood continues to take steps to avoid potential securities violations by not listing certain tokens and avoiding crypto lending and staking services that have led other platforms to lawsuits as stated by its chief compliance officer.