The US Securities and Exchange Commission (SEC) has taken a tough stance on cryptocurrencies, issuing a warning to Robinhood Markets Inc. about potential enforcement action related to its crypto business. This move by the SEC suggests that it is continuing its crackdown on digital assets.
Robinhood, known for its stock trading, stated that the SEC’s enforcement staff had sent the company a Wells notice, which is a recommendation for enforcement action. As a result, Robinhood’s shares dropped over 2% in premarket trading. However, Robinhood will have the chance to respond to the SEC’s allegations before any action is taken. If they choose to do so, the SEC may back off or proceed with legal action.
The SEC’s chief legal officer expressed disappointment with the decision made by the regulator, stating that they believe that the assets on their platform are not securities. The SEC declined to comment on the matter but has been clear in its stance: under Chair Gary Gensler, it contends that most tokens are subject to its rules and that platforms where they are traded should be registered.
This stance has already led to actions against other well-known crypto brokerages and trading platforms like Coinbase Global Inc., and Robinhood had previously been issued an investigative subpoena related to its cryptocurrency listings and custody. The SEC uses a test outlined in a 1946 Supreme Court case to determine if an asset falls under its securities rules. Crypto advocates argue that many digital assets do not meet this standard and urge the SEC to develop updated rules that consider the unique characteristics of this asset class.
In conclusion, while it remains uncertain what action will be taken against Robinhood Markets Inc., one thing is clear: the SEC continues its crackdown on digital assets and is not backing down from enforcing its regulations in this space.