- Robinhood is reconsidering its crypto offering following SEC’s actions against Binance and Coinbase.
- Solana, Cardano, and Polygon are some tokens that Robinhood may delist.
- The SEC’s actions could trigger a selloff in the entire crypto market.
Crypto assets are facing an existential threat in the US, as the latest regulatory crackdown is already making major exchanges consider their offerings. In particular, trading app Robinhood is considering delisting select crypto assets from its platform.
On Tuesday, June 6, 2023, Robinhood’s legal chief Dan Gallagher informed the US Congress about the platform’s stance on crypto offerings. The remarks came following the Securities and Exchange Commission’s (SEC) lawsuit against major crypto exchanges.
Robinhood, which currently lists 18 different tokens, is considering delisting cryptos that the SEC classified as unregistered securities. These include Solana (SOL), Polygon (MATIC), and Cardano (ADA).
Robinhood Delisting Under Pressure?
On Monday, June 5, the U.S. Securities and Exchange Commission (SEC) initiated a crackdown on two of the largest crypto exchanges, Binance and Coinbase. The lawsuit against Binance mentioned specific tokens on Binance’s platform as securities.
The tokens mentioned in the SEC lawsuit against Binance are: BNB, BUSD, Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and COTI.
Robinhood does possess a broker-dealer license that allows it to trade securities. However, Gallagher, formerly an SEC commissioner, does not believe the license allows it to trade cryptocurrencies named in the SEC filings safely.
No cryptocurrencies have been delisted as of yet. However, if Robinhood decides it could face legal action over these tokens, they will likely be removed.
What Delisting Crypto Means for Robinhood
Crypto makes up a small but significant portion of Robinhood’s revenues. In the first quarter of 2023, Robinhood reported total net revenues of $441 million. The company’s crypto revenues comprised less than 10% of that figure, amounting to $38 million.
It is important to note that not all of the crypto tokens Robinhood lists are in the SEC lawsuit. Still, Robinhood serves US customers exclusively, meaning that it has few options when it comes to geographic diversification.
The majority of Robinhood’s revenues come from payments for order flow. This means that when customers place trades, Robinhood sells the right to execute these trades to market makers. Market makers pay Robinhood a small fee for this, a fraction of a cent per share.
On the Flipside
- The SEC did not mention the biggest cryptos, including Bitcoin and Ethereum. Moreover, the agency did not mention substantial Proof-of-Work tokens such as Litecoin or Dogecoin.
- The lawsuit did not mention major stablecoins like Tether (USDT) and USD Coin (USDC). The only stablecoin it mentions is Binance’s BUSD stablecoin, with Paxos as its issuer.
Why This Matters
Robinhood is one of the world’s largest stock and crypto trading apps. Its delisting of major crypto tokens could negatively impact their price.
Read more about Robinhood’s run-ins with the SEC:
Read about how Apple’s AR headset makes the case for crypto: