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A boost for US institutional cryptocurrencies
Robinhood, a popular stock trading app, is set to significantly enhance its cryptocurrency services by acquiring Bitstamp, an established cryptocurrency exchange.
The deal, worth $200 million, is part of Robinhood’s strategic initiative to cater to institutional clients in the United States. Pending regulatory approvals, this acquisition is expected to be completed in the first half of 2025.
Respond to client demand for cryptocurrency diversification
This strategic move by Robinhood is largely a response to its customers’ growing demand for diversified cryptocurrency products. Johann Kerbrat, chief executive officer of Robinhood Crypto, told the Wall Street Journal that this expansion comes after years of growing engagement from customers expressing their desire for a broader range of crypto offerings.
Vlad Tenev, co-founder and CEO of Robinhood, further highlighted the transformative potential of cryptocurrencies in reshaping the financial landscape.
In a statement on social media platform and bet. He stressed that these elements are fundamental to Robinhood’s strategy to radically reorganize the financial system.
Vlad Tenev on X (Twitter)
Robinhood Expands Crypto Offerings with Institutional-Grade Services
Since the introduction of Bitcoin and Ether trading in 2018, Robinhood has been actively expanding its cryptocurrency offerings. The Bitstamp incorporation is intended to elevate Robinhood’s capabilities by adding institutional-grade services, including institutional lending, staking, and Bitstamp’s white-label solution known as Bitstamp-as-a-service.
Kerbrat highlighted the importance of the Bitstamp acquisition, highlighting its reputation for reliability and its proven resilience through various market cycles.
He lauded the Bitstamp team for building a strong reputation among both retail and institutional cryptocurrency investors by seamlessly matching customer experience with security across various geographies.
Founded in 2011, Bitstamp has over 50 active regulatory licenses and registrations worldwide, positioning itself as a trusted and globally recognized platform.
Despite the acquisition, Bitstamp will retain its branding and continue its operations under its established name, maintaining its unique identity in the industry.
Robinhood faces legal hurdles in US cryptocurrency industry
However, the expansion comes amid looming legal challenges for Robinhood in the US. In early May, Robinhood has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC).marking the culmination of an investigation into US-based Robinhood’s cryptocurrency business.
This notice referred to a preliminary decision to recommend enforcement action due to alleged violations of securities laws. The SEC’s investigation into Robinhood focused on things like cryptocurrency listings and cryptocurrency custody operations.
Despite Robinhood’s proactive attempts to work with the SEC for regulatory clarity, including an initiative to formally register its operations, the issuance of the Wells notice created a complex scenario for the acquisition.
Dan Gallagher, head of legal, compliance and corporate affairs at Robinhood Markets, expressed disappointment with the SEC’s decision. In a blog post dated May 6, Gallagher detailed Robinhood’s ongoing efforts to engage with the SEC, with the goal of eliminating regulatory hurdles and promoting transparency.
He underlined the company’s commitment to working with the regulator to address and resolve any breaches. Receipt of Wells’ notice does not definitively indicate that the SEC will pursue litigation against Robinhood.
However, it highlights the regulatory complexities involved in expanding into the cryptocurrency space. Robinhood has indicated its intent to continue working with the SEC to ensure compliance and mitigate any legal risks associated with its operations.
As the situation evolves, Robinhood remains focused on its mission to democratize finance for all by addressing regulatory challenges while expanding its cryptocurrency offerings.