The U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into Robinhood’s cryptocurrency division without pursuing enforcement action, marking a significant regulatory shift in the crypto industry under President Donald Trump’s administration. Robinhood announced the news Monday, just days after Coinbase revealed a similar development in its own legal battle with the SEC.
The decision follows a broader trend of deregulation in the crypto space, with the SEC reconsidering enforcement actions against major players like Binance and dismantling its Crypto Assets and Cyber Unit in favor of a smaller, rebranded Cyber and Emerging Technologies Unit. This restructuring signals a move away from the aggressive “regulation by enforcement” approach championed by former SEC Chair Gary Gensler under President Joe Biden.
Regulatory Landscape Under Trump: A Crypto Comeback?
The closure of the Robinhood probe is the latest indication of a more crypto-friendly regulatory environment. Since taking office, Trump has delivered on campaign promises to ease financial regulations, including issuing an executive order directing a working group to reassess crypto rules. The industry has also benefited from the repeal of an SEC accounting rule that had previously hindered institutional adoption of digital assets.
Hester Peirce, a pro-crypto SEC commissioner leading the agency’s new crypto task force, criticized past enforcement tactics, stating that the lack of clear regulations has allowed “jokers and thieves” to thrive while legitimate crypto projects struggle. Robinhood echoed this sentiment, with Chief Legal Officer Dan Gallagher saying in a press release, “Let me be crystal clear—this investigation never should have been opened.”
The SEC had previously warned Robinhood in May 2024 that it could face enforcement action over its failure to register certain crypto assets as securities. However, the company argued that it had made “good faith attempts” to comply with regulations and even sought SEC guidance on how to register.
Robinhood’s Market Reaction: Initial Boost, Then a Slide
Robinhood’s stock initially jumped on the news but later fell 5.2% in morning trading, reflecting broader market downturns. While crypto trading has become a significant revenue driver for Robinhood, accounting for nearly half of its $672 million transaction-based revenue in Q4 2024, investor confidence remains shaky amid fluctuating regulatory signals.
Despite regulatory uncertainty, Robinhood is aggressively expanding its crypto business. The company is in the process of acquiring cryptocurrency exchange Bitstamp to strengthen its institutional market presence, and it has been rolling out new digital asset offerings post-election.
What’s Next for Crypto Regulation?
While the SEC’s recent actions suggest a shift toward a more hands-off approach, regulatory uncertainty still looms. The agency is actively meeting with industry leaders, including Robinhood, to discuss potential frameworks for crypto regulation. However, without clear legislative action from Congress, crypto firms remain at the mercy of changing political administrations.
For now, Robinhood and other major crypto firms appear to be winning their battles against regulatory overreach. But as history has shown, regulatory tides can shift rapidly—especially in an industry as volatile as crypto.
Sources
- Michelle Chapman, “Robinhood says SEC has closed its investigation into the company,” Associated Press, February 24, 2025. AP News (Retrieved: February 26, 2025).
- Tanaya Macheel, “Robinhood says SEC dismissed crypto unit investigation in latest sign of easier regulation for industry,” CNBC, February 24, 2025. CNBC (Retrieved: February 26, 2025).
- “SEC Crypto Task Force Meets With Robinhood to Discuss Digital Asset Regulations,” Bitcoin News, February 24, 2025. Bitcoin News (Retrieved: February 26, 2025).
- Emily Dattilo and Andrew Welsch, “Robinhood Crypto Investigation Dropped by SEC. The Stock Is Falling,” Barron’s, February 24, 2025. Barron’s (Retrieved: February 26, 2025).
- “Robinhood: SEC Calls Off Probe Into Crypto Business,” PYMNTS, February 24, 2025. PYMNTS (Retrieved: February 26, 2025).
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