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Robinhood Flies to Europe With Commission-Free Crypto Trading: U.S. Exodus Continues After SEC Issues

Last Updated December 7, 2023 2:19 PM
Teuta Franjkovic
Last Updated December 7, 2023 2:19 PM

Key Takeaways

  • Robinhood launches crypto trading in the EU with 26 tokens
  • The EU’s comprehensive crypto regulatory framework was a key factor in choosing the region for its global expansion.
  • Robinhood’s crypto business has faced regulatory scrutiny from the SEC and other U.S. regulators.

After years of attempting to influence federal regulation in the United States, an increasing number of American cryptocurrency companies—particularly exchanges facilitating the buying and selling of digital tokens—are now contemplating strategies to expand their operations overseas.

The growing regulatory challenges and uncertainties in the U.S. have led these companies to seek more favorable regulatory environments abroad, where they believe they can navigate the regulatory landscape with greater ease and flexibility.

One of them is Robinhood, a prominent brokerage that announced  the launch of a cryptocurrency trading feature in the European Union.

Entering the European Crypto Market With 26 Cryptocurrencies

The stock trading application Robinhood, which also facilitates cryptocurrency transactions, declared  on early Thursday the official commencement of cryptocurrency trading operations in the European Union. This move comes one month after the company hinted at such plans in a quarterly earnings report.

As part of its expansion into the EU market, Robinhood will feature 26 cryptocurrencies, including 11 that are presently unavailable to its U.S. clientele.

Notably, the European offering will encompass tokens such as SOL, MATIC, and ADA. It’s worth highlighting that Robinhood removed these particular tokens from its U.S. platform in June due to regulatory pressures.

“The EU has developed one of the world’s most comprehensive policies for crypto asset regulation, which is why we chose the region to anchor Robinhood Crypto’s international expansion plans.,” stated  Johann Kerbrat, Robinhood’s head of crypto.

Robinhood’s venture into the European market stands out as one of the company’s significant crypto-related announcements since the introduction of its Web3 wallet in January.

Johann Kerbrat did not immediately respond to a request for comment.

Committed to Crypto Despite Revenue Decline

Despite experiencing a decline in cryptocurrency revenues since the middle of 2021, the online brokerage has steadfastly adhered to its commitment to the legally complex crypto industry.

Recent indicators suggest a potential positive shift, with Robinhood revealing a 75% increase in crypto trading volumes  in November compared to the preceding month.

Renowned for its involvement in the meme-stock trading frenzy  in early 2021, Robinhood initially unveiled its crypto trading platform in 2018, featuring only Bitcoin and Ethereum.

Over time, the platform has actively sought to diversify its offerings, positioning cryptocurrency as an integral component of its overall business strategy.

During the second quarter of 2021, revenue generated from cryptocurrency transactions constituted approximately 41% of Robinhood’s total revenue, notably influenced by the surge in the value of the meme-inspired Dogecoin.

In that same quarter, fees derived solely from Dogecoin trading contributed to almost 26% of the company’s overall revenue, as outlined in its quarterly report. This underscores Robinhood’s evolving dependence on cryptocurrency as a significant revenue driver within its diverse portfolio of financial services.

Relisting Tokens in EU Signals Confidence in Regional Regulations

Following its foray into the crypto market, Robinhood’s crypto business has encountered regulatory scrutiny, leading to a decline in transaction revenues from cryptocurrency trading.

In August 2022, the top financial regulator in New York imposed a $30 million fine  on Robinhood’s crypto unit. Subsequently, in December 2022, the Securities and Exchange Commission (SEC) issued an investigatory subpoena  to the firm regarding its cryptocurrency-related activities.

In June, the SEC filed lawsuits against Binance and Coinbase, citing SOL, MATIC, and ADA as unregistered securities, prompting Robinhood to swiftly delist these cryptocurrencies from its exchange.

Despite these regulatory challenges, Robinhood has made the strategic decision to relist SOL, MATIC, ADA, and other tokens in the European Union. Notably, the SEC had identified these tokens as unregistered securities in its lawsuits against other platforms.

This move suggests that Robinhood is expressing confidence in the regulatory framework of the European Union, particularly following the enactment of comprehensive cryptocurrency legislation in April.

The relisting of these tokens underscores Robinhood’s belief in the adherence to regulatory compliance within the European regulatory regime, presenting an opportunity for the platform to navigate and thrive in a regulatory environment that has demonstrated a proactive approach to addressing the complexities of the cryptocurrency market.

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