The Securities and Exchange Commission (SEC) has concluded its investigation into Robinhood’s cryptocurrency division and decided not to pursue legal action. This follows the SEC’s withdrawal of its lawsuit against Coinbase last week.
Under former Chairman Gary Gensler, the SEC investigated several cryptocurrency exchanges regarding their handling of crypto assets, including staking. Staking involves investing crypto assets to support blockchain networks and earn rewards, which Gensler’s SEC deemed as a security. This led to allegations that exchanges offering staking services were dealing in unregistered securities.
However, the exchanges disputed these allegations, claiming a lack of clear crypto regulations from the SEC and legislators. Coinbase chose to fight the SEC’s lawsuit, while Robinhood avoided trading crypto assets that raised SEC concerns.
Despite not facing a lawsuit, Robinhood received a Wells Notice in May, indicating the potential for legal action. The crypto industry hopes to utilize this period of crypto-friendlier policies under the current administration to establish regulations.
The crypto industry has faced issues with consumer protection. Whether it will embrace responsible regulations or revert to unregulated practices remains to be determined.
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