Robinhood, the renowned commission-free trading platform, is re-evaluating its stance on multiple cryptocurrencies in light of the U.S. Securities and Exchange Commission’s (SEC) recent crackdown on crypto exchanges. The SEC has filed lawsuits against major exchanges like Coinbase and Binance, claiming various violations of securities regulations.
The SEC’s Lawsuits Against Coinbase and Binance :
Recently, the SEC launched legal action against Coinbase, a prominent cryptocurrency exchange listed on Nasdaq, followed by a similar lawsuit against Binance, a leading crypto exchange. The charges against Coinbase include accusations of operating as an unregistered broker and exchange, while Binance faces allegations of operating unregistered exchanges, broker-dealers, and clearing agencies. Moreover, Binance is accused of misrepresenting trading controls and oversight on its Binance.US platform, as well as conducting unregistered securities offerings.
SEC’s Classification of Cryptocurrencies :
The SEC identified several cryptocurrencies as securities in its legal filings, such as Cardano’s $ADA and Solana’s SOL. Overall, the SEC has categorized over 60 digital assets as securities, including Polygon ($MATIC), Cosmos ($ATOM), Axie Infinity’s $AXS, and $NEXO. These actions have prompted Robinhood, a platform known for its limited selection of 18 digital tokens, to carefully consider its future steps, according to Dan Gallagher, Robinhood’s Chief Legal Officer and former SEC commissioner.
SEC Chair’s Perspective and Coinbase’s Lawsuit ;
During a televised appearance, SEC Chair Gary Gensler expressed his belief that additional digital currencies were unnecessary, given the existence of traditional forms of digital currency like the U.S. dollar, euro, and yen. Gensler emphasized that the lawsuits against Coinbase and Binance resulted from the meticulous investigation and highlighted the SEC’s attempts to engage with the platforms to ensure compliance. Notably, Coinbase has sued the SEC, seeking clear regulation for cryptocurrencies. However, the SEC has sought to dismiss the lawsuit, indicating that establishing comprehensive rules could be a time-consuming process.
Robinhood’s deliberation over cryptocurrency support comes as the SEC intensifies its scrutiny of crypto exchanges. The ongoing legal battles and regulatory developments in the cryptocurrency space are set to shape the future of digital asset trading and compliance measures.